On Thursday 1 December, the European Commission presented two proposed implementing regulations of the directive 'MiFID II' (2014/16), both of which aim to limit financial speculation on the raw materials derivatives markets, in particular by introducing a methodology to calculate position limits.
The methodology proposed will allow the competent authorities to set the maximum amount of derivative financial products in raw materials – agriculture products, energy products – that a single investor may hold. It brings in a base limit and seven criteria which may be used as a basis to amend this limit.
The implementing measures also aim to identify when a producer is acquiring raw materials derivatives as protection from the limits of the profession, in which case they will not be subjected to the same prudential rules as an actual trader active on this market in order to make profits ('ancillary activity test').
These proposals, which the European Parliament and the Council have still to approve or reject en masse, are the result of opinions put forward by the European Securities and Market Authority and, according to the Commission, respond to Parliament's request to set in place the strictest possible rules. We have answered the concerns of the European Parliament whilst making sure that we do not excessively hamper the financing of the economy, a Commission expert commented.
When asked about the level playing field between the European and American markets, this expert said that the two markets are difficult to compare: the European rules cover more than 1000 contracts in different raw materials derivatives, whilst the American rules cover just 28 contracts and authorise a greater number of exceptions. He said that the European institution had sought a balance between excessively flexible rules likely to attract financial speculation and overly strict rules, which may lead to a delocalisation of activity.
The two draft regulations are the last of a raft of 28 implementing measures required for the implementation of the 'MiFID II' directive, the application of which has been postponed from January 2017 until January 2018.
For more information, see: http://ec.europa.eu/finance/securities/docs/isd/mifid/rts/161201-rts-21_en.pdf . (Original version in French by Mathieu Bion)