Position limits for commodity derivatives

Any person based in or residing in the Netherlands is prohibited to maintain a net position in a critical or significant commodity derivative that exceeds the position limit. This also applies to parties that are not subject to a licence obligation. It is possible to apply for a position limits exemption.

Supervision of position limits

The AFM set position limits for all critical or significant commodity derivatives traded on a trading venue located or managed in the Netherlands. These limits also apply to economically equivalent OTC contracts. The limits are set based on all positions held by a party and those positions that are held on its behalf at an aggregate group level.

If a set position limit is about to be exceeded, the AFM may force a party not to enter into new agreements regarding a commodity derivative to which that position limit applies or to reduce the volume of the position within a reasonable period set by the AFM.

Which contracts has the AFM currently identified as critical or significant?

The AFM has identified one commodity derivative as critical or significant, namely the TTF gas contract, which is traded on ICE Endex in the energy derivatives segment. The table below, the ‘Overview Table’, shows the market specifications, the product specifications and the contract specifications, as well as a reference to the ESMA Opinion for overall overview and technical details, and the effective date of the limits taking effect. Each commodity derivatives contract in fact has one position limit for the spot month and one position limit for the other months, both expressed below in the energy unit Mwh. After the AFM has set a position limit, that position limit may be subject to;

- an adjustment if the AFM establishes that the deliverable supply in the spot month,
- or the total open contracts in the other months has changed substantially,
- or in case of another significant change in the market.

The percentage in italics represents the adjustment factor chosen by the AFM within the possible ranges for both types of limits.

Overview table

After such an adjustment, the details of the new limit and the effective date will be presented in the table above.