ESMA_QA_1278

Status: ✅ Answer Published

Link to ESMA Q&A tool: https://www.esma.europa.eu/publications-data/questions-answers/1278

---

Regulatory Context

Regulation : MIF2

Level 1 Regulation: Markets in Financial Instruments Directive II (MiFID II) Directive 2014/65/EU- Secondary Markets

Level 2 Regulation: No information available

Level 3 Regulation: No information available

Topic: Position limits

Subject Matter: Hedge exemption

---

Question

Submission Date: 23 September 2022

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?

---

ESMA Answer

Answer Date: 23-09-2022

[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.

---

This document was automatically extracted from the ESMA EMIR Q&A database.