On July 23, 2021, ISDA and the Futures Industry Association (FIA) submitted a joint response to the European Securities and Markets Authority’s (ESMA) consultation on technical standards (draft RTS 21 and ITS 4) for commodity derivatives, following announced changes to the position limits regime as part of the revised Markets in Financial Instruments Directive’s ‘quick fix’, which will apply from February 28, 2022.

While members are largely supportive of draft RTS 21 and ITS 4 and believe they will improve the position limits regime, there are some areas of concern. These include ESMA’s proposals relating to a scenario where deliverable supply is substantially higher than open interest, and proposals relating to position management, which the associations believe would benefit greatly from increased flexibility for trading venues to avoid a substantial burden on both the venues and market participants.