ESMA · ESMA_QA_1278 Answer Published

Hedge exemption

Regulation
Markets in Financial Instruments Directive II (MiFID II) Directive 2014/65/EU- Secondary Markets
Topic
Position limits
Submitted
2022-09-23
Answered
2022-09-23
Browse MiFID Register → More Q&As on this regulation →

Question

Can a hedge exemption be netted against positions in derivatives which are not objectively measurable as reducing risks directly related to that person’s commercial activity?

Answer

[ESMA70-872942901-36 Commodity derivatives, Position limits, Q&A11] No. Once an exemption has been granted and positions are approved as risk-reducing in accordance with Article 8 of RTS 21a, those positions fall outside the position limit regime. Otherwise, the benefit of a risk-reducing position would be double-counted, by first being excluded from the limit and then being used to offset a speculative exposure.
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This Q&A is published by European Securities and Markets Authority and is non-binding. It does not constitute legal advice. Updated weekly from official ESA sources.

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