Position limits and position management controls

(1) Subject to section 55, the Bundesanstalt sets, for every derivative on agricultural commodities and every critical or significant commodity derivative traded on a domestic trading venue, a quantitative threshold for the maximum size of a position in that derivative that a person may hold (position limit). Commodity derivatives are deemed critical or significant where the sum of all net positions of the holders of end positions corresponds to the scope of their open positions and amounts, on average, to at least 300,000 tradeable units within 12 months. Further provisions on the calculation methodology by which position limits in spot months and other months are set for physically settled or cash-settled commodity derivatives, based on the characteristics of the relevant derivatives, are set out in the regulatory technical standards adopted by the Commission under Article 57(3) of Directive 2014/65/EU, as amended from time to time.
(2) The position limit must be set so that it
1. prevents market abuse within the meaning of Article 1 of Regulation (EU) No 596/2014, and
2. contributes to orderly pricing and settlement conditions. In particular, the position limit contributes to pricing and settlement conditions within the meaning of the first sentence, number 2, where it
1. prevents positions that distort the market, and
2. ensures convergence between the price of the derivative in the delivery month and the price of the underlying commodity on the relevant spot markets, without affecting price formation in the market for the underlying commodity.
(3) In exceptional cases, the Bundesanstalt may set position limits stricter than those calculated under subsections (1) and (2), where this is warranted and proportionate having regard to the liquidity in the derivative concerned and in the interest of the orderly functioning of the market concerned. A determination under the first sentence must be published on the Bundesanstalt's website and is limited to a maximum of six months from the date of publication. Where the grounds under the first sentence continue to exist after expiry of that period, the determination may be extended for a further period of up to six months at a time. Subsection (4) applies correspondingly.
(4) Before setting a position limit under subsection (1), the Bundesanstalt notifies the European Securities and Markets Authority of the intended position limit. Where that Authority requires a change to the position limit within two months of receiving the notification under the first sentence, and the Bundesanstalt does not comply with that request, it communicates its decision, including its reasons, to the European Securities and Markets Authority and publishes its reasoned decision on its website. The Bundesanstalt transmits the details of the position limits it has set to the European Securities and Markets Authority.
(5) Where the deliverable supply of a derivative, or the number or volume of open contract positions in a derivative, changes materially, or other material changes occur in the market, the Bundesanstalt resets the position limits in accordance with subsections (1) to (4). Operators of trading venues inform the Bundesanstalt of material changes at their trading venue under the first sentence.
(6) The operator of a multilateral or organised trading facility on which commodity derivatives or derivatives on emission allowances are traded must establish procedures for the ongoing monitoring of positions (position management controls). These must be designed transparently and without discrimination, must specify how they are to be applied, and must have regard to the nature and composition of market participants and their use of the contracts admitted to trading. In the context of controls under the first and second sentences, the operator of a trading venue must in particular ensure that it has the right to
1. monitor the open contract positions of every person,
2. obtain from every person access to information, including all relevant documentation, on the size and purpose of a position or open exposure entered into, on beneficial or actual owners, any arrangements, and any associated assets or liabilities in the relevant underlying, including, where appropriate, positions held in commodity derivatives with the same underlying and the same characteristics on other trading venues and in economically equivalent OTC contracts, through members and participants,
3. require every person to terminate or reduce, temporarily or permanently, a position it has entered into and, where that person fails to comply, to take appropriate unilateral measures to ensure the termination or reduction, and
4. require every person, temporarily, to bring liquidity back into the market at an agreed price and in an agreed size, specifically for the purpose of mitigating the effects of a large or dominant position. The operator informs the Bundesanstalt of the details of the position management controls under the first to third sentences. The Bundesanstalt transmits this information to the European Securities and Markets Authority. Further provisions on the content of the position management controls are set out in the regulatory technical standards adopted by the Commission under Article 57(8) of Directive 2014/65/EU, as amended from time to time, in conjunction with Article 10 to 14 of Regulation (EU) No 1095/2010.