MAR 10.1 Application

1. (1)

   1The purpose of this chapter is to implement articles 57 and 58 of MiFID by setting out the necessary directions, rules and guidance.

2. (2)

   In particular, this chapter sets out the FCA’s requirements in respect of:

   1. (a)

      articles 57(1) and 57(6) of MiFID, which require competent authorities or central competent authorities to establish limits, on the basis of a methodology determined by ESMA, on the size of a net position which a person can hold, together with those held on the person’s behalf at an aggregate group level, at all times, in commodity derivatives traded on trading venues and economically equivalent OTC contracts to those commodity derivatives;

   [Note: articles 3 and 4 of MiFID RTS 21]

   1. (b)

      article 57(8) of MiFID, which requires MiFID investment firms and market operators operating a trading venue which trades commodity derivatives to apply position management controls;

   2. (c)

      article 58(1) of MiFID, which requires MiFID investment firms and market operators operating a trading venue which trades commodity derivatives or emission allowances to provide the competent authority with reports in respect of such positions held; and

   3. (d)

      article 58(2) of MiFID, which requires investment firms trading in commodity derivatives or emission allowances outside a trading venue to provide the competent authority or central competent authority with reports containing a complete breakdown of their positions held through such contracts traded on a trading venue and economically equivalent OTC contracts, as well as of those of their clients and the clients of those clients until the end client is reached.

3. (3)

   The position limit requirements apply to both authorised persons and unauthorised persons. As such, the MiFI Regulations provide for a separate regulatory framework in relation to such persons. This framework is set out in:

   1. (a)

      Part 3 of the MiFI Regulations (‘Position limits and position management controls in commodity derivatives’); and

   2. (b)

      Schedule 1 to the MiFI Regulations (‘Administration and enforcement of Part 3, 4 and 5’), which provides for the administration and enforcement of position limits established by the FCA, and of the reporting of positions in commodity derivatives, emission allowances and economically equivalent OTC contracts.

   This chapter complements and adds to the regulatory framework in the MiFI Regulations by establishing the applicable position limits.

1. (1)

   The scope of this chapter is as follows: In respect of position limit requirements in MAR 10.2, a commodity derivative position limit established by the FCA in accordance with MAR 10.2.2D(1) applies regardless of the location of the person at the time of entering into the position and the location of execution.

[Note: article 57(14)(a) of MiFID]

1. (2)

   In respect of position management controls requirements:

   1. (a)

      the requirements contained or referred to in MAR 10.3 apply to persons operating a trading venue which trades commodity derivatives in respect of which the FCA is the Home State competent authority; and

   2. (b)

      in the case of a UK branch of a third country investment firm operating an MTF or OTF, MAR 10.3 applies in the same way as it does to a UK firm operating a multilateral trading facility or an OTF.

2. (3)

   In respect of position reporting requirements:

   1. (a)

      the position reporting requirements in MAR 10.4 apply to:

      1. (i)

         a UK regulated market; and

      2. (ii)

         a UK firm or a UK branch of a third country investment firm operating a multilateral trading facility or an OTF,

      when operating a trading venue which trades commodity derivatives or emission allowances; and

   2. (b)

      the position reporting requirements in MAR 10.4 apply to an investment firm regardless of its location at the time of entering into the position and the location of execution.

This chapter is structured as follows:

1. (1)

   MAR 10.1 sets out an introduction to MAR 10, a description of the application of MAR 10 to different categories of person, an explanation of the approach taken to the UK transposition of articles 57 and 58 of MiFID, the scope and territoriality of this chapter, and the structure of this chapter.

2. (2)

   MAR 10.2 sets out the position limit requirements.

3. (3)

   MAR 10.3 sets out the position management controls requirements.

4. (4)

   MAR 10.4 sets out the position reporting requirements.

5. (5)

   MAR 10.5 sets out other reporting, notification and information requirements.