The FMLC has sent a letter to ESMA which explores a particular point of legal uncertainty flowing from Article 57 of Directive 2014/65/EU on markets in financial instruments (“MiFID II”). This article—which concerns position limits and position management controls in commodity derivatives—requires position limits to be set on the basis of all positions held by a person and those held on its behalf at an aggregate group level. To this end, Article 57 directs ESMA to develop methods to determine when the positions of a person are to be aggregated within a group. It is within the context of this methodology—Commission Delegated Regulation (EU) 2017/591 (“RTS 21”)— that legal uncertainty arises as to the meaning of “control” when aggregating positions.
In particular, the FMLC’s letter asks whether under RTS 21 “control” is meant as a proxy for a parent/subsidiary relationship, and whether a parent undertaking is required to aggregate the positions of subsidiary undertaking where it cannot control the use of positions (in cases where the subsidiary is not a collective investment vehicle).
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