49 / 72
Global Trustee and Fiduciary Services News and Views | MiFID II Special Edition 2016
47
HMT will partly transpose the requirements
in MiFID II on position management, position
limits and position reporting into UK
legislation. In CP16/19, the FCA is proposing
to introduce a new chapter in the Market
Conduct sourcebook (MAR). This will include
guidance on aspects of the legislation and
rules on matters such as position management
by investment firms operating MTFs and OTFs.
In 2017, the FCA will set position limits to take
effect on 3 January 2018.
The proposed new chapter in MAR, MAR 10,
will be entitled “Commodity Derivative Position
Limits and Controls and Position Reporting” and
it will be split into five sections:
1. MAR 10 application
2. Position limit requirements
3. Position managment controls
4.Position reporting
5. Other reporting, notification and
information requirements
FCA description of implications for firms in
CP16/19
Persons, whether authorised or not, trading
commodity derivatives will need to configure
their trading activities so they are able to
comply with position limits.
3
This will involve:
• Some unauthorised firms applying for
exemptions from position limits.
• Persons making arrangements to report their
positions or for their positions to be reported
on a daily basis.
• Trading venues putting arrangements in place
to provide position reports to regulators
on a daily basis, and to report aggregated
information about positions to the European
Securities and Markets Authority (ESMA) on a
weekly basis.
• And trading venues reviewing and adapting,
as necessary, current rules and procedures
they have regarding the monitoring and
management of positions.
Position limits
Position limits will be set on all commodity
derivatives traded on UK trading venues in line
with the methodology established by ESMA.
4
The FCA will hold sufficient powers to enable
it to obtain information, from trading venues
and other sources, to be able to establish the
position limits.
Position reporting will be an obligation on
trading venues and investment firms in
line with MiFID II and the FCA will provide
guidance on its expectations for the production
and submission of position reports, their
methodology, content and format.
Supervision manual (SUP) (Chapter 3)
The notification provisions in this chapter
are relevant for all MiFID investment
firms, the transitional provision to firms
currently transaction reporting and the
passporting provisions to MiFID investment
firms that currently passport or intend to
do so under MiFID II.
The FCA is proposing to make changes to SUP
to cover three main issues related to MiFID II:
1. Make it clear that firms need to notify
the FCA of a breach of directly applicable
regulations under MiFID II or implementing
regulations introduced by the Treasury, and
to ensure that information given to the FCA
is accurate and complete.
2. Introduce transitional provisions to deal with
the revocation of the MiFID implementing
regulation.
3. To update aspects of the passporting provisions.
As regards the transitional provisions in SUP,
the FCA proposes to do two things that are
of particular relevance to firms’ transaction
reporting obligations:
• The FCA makes it clear that an obligation
that a firm incurs under SUP 17 or the MiFID
implementing regulation on or before 2 January
2018 continues until it has been satisfied.
• And that the requirements in SUP relating
to notification and remedy of breaches apply to
breaches of MiFID implementing regulation, even
if the breach comes to light after 2 January 2018.
FCA description of implications for firms in CP16/19
Firms will need to extend their existing
arrangements for monitoring and reporting of
breaches under MiFID to the new requirements
under MiFID II. They will also need to prepare,
with help and guidance from the FCA and ESMA,
for the practical implications of the changeover
from the current transaction reporting
obligations to those under MiFID II.