L.S. 370.36 Regolamenti Dwar Position Limits and Position Management Controls in Commodity Derivatives and Reporting

(1)The title of these regulations is the Position Limits in C om m od it y De r i va t iv e s , P os i tion Ma nagement Controls in Commodity Derivatives and Derivatives of Emission Allowances Regulations. Title and scope. Amended by: L.N. 219 of 2025

(2)The purpose of these regulations is to implement Article 57

(1),

(2),

(4)to

(6),

(8)to

(11),

(13)and

(14), Article 58

(1)to

(4), Article 69

(2)(

1. o)and (
2. p)and Article 79

(5)of MIFID as herein defined, and they shall be interpreted and applied accordingly. 2. requires:

(1)In these regulations unless the context otherwise "the Acts" means the Financial Markets Act and the Investment Services Act; "Central competent authority" means the regulatory authority of the trading venue where the largest volume of trading takes place; "agricultural commodity derivatives" contracts relating to products listed in: (

1. i)means derivative Article 1 of Regulation (EU) No 1308/2013 of the European Parliament and of the Council; (
2. ii)Parts I to XX and XXIV/1 of Annex I to the Treaties of the European Union; and (iii) Annex I to Regulation (EU) No 1379/2013 of the European Parliament and of the Council; "Directive 2009/65/EC" means Directive 2009/65/EC of the European Parliament and of the Council of 13 July 2009 on the coordination of laws, regulations and administrative provision relating to undertakings for collective investment in transferable securities (UCITS) as amended from time to time, and includes any implementing measures that have been or may be issued thereunder; "Directive 2011/61/EC" means Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on Alternative Investment Fund Managers, as amended from time to time, and includes any implementing measures that have been or may be issued thereunder; "Directive 2009/138/EC" means Directive 2009/138/EC of the Definitions. Amended by: L.N. 89 of 2022. Cap. 345. Cap. 370. 1 2 [ S.L.370.36 POSITION LIMITS AND POSITION MANAGEMENT CONTROLS IN COMMODITY DERIVATIVES AND REPORTING European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II), as amended from time to time, and includes any implementing measures that have been or may be issued thereunder; "Directive 2003/41/EC" means Directive 2003/41/EC of the European Parliament and of the Council of 3 June 2003 on the activities and supervision of institutions for occupational retirement provision, as amended from time to time, and includes any implementing measures that have been or may be issued thereunder; "Directive 2003/87/EC" means Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community, as amended from time to time, and includes any implementing measures that have been or may be issued thereunder; "ESMA" means the European Securities and Markets Authority established by Regulation (EU) No 1095/2010 of the European Parliament and of the Council of 24 November 2010; "investment firm" means any legal person, other than persons to whom MiFID does not apply in terms of Article 2 of the said Directive, whose regular occupation or business is the provision of any one or more investment services to third parties on a professional basis; "MiFID" means Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU, as amended from time to time, and includes any implementing measures that have been or may be issued thereunder; "MiFIR" means Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments, as amended from time to time; Cap. 370. Cap. 371. "predominantly commercial group" means any group of which the main business is not the provision of investment services within the meaning of the First Schedule to the Investment Services Act, or the performance of any activity listed in Annex I to Directive 2013/ 36/EU as transposed in the First Schedule to the Banking Act, or acting as a market maker in relation to commodity derivatives; "Regulation (EU) No 1095/2010" means Regulation (EU) No 1095/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority POSITION LIMITS AND POSITION MANAGEMENT CONTROLS IN COMMODITY DERIVATIVES AND REPORTING [ S.L.370.36 3 (European Securities and Markets Authority), as amended from time to time; "Regulation (EU) No 1227/2011" means Regulation (EU) No 1227/2011 of the European Parliament and of the Council of 25 October 2011 on wholesale energy market integrity and transparency, as amended from time to time; "Regulation (EC) 713/2009" means Regulation (EC) No 713/ 2009 of the European Parliament and of the Council of 13 July 2009 establishing an Agency for the Cooperation of Energy Regulators, as amended from time to time.

(2)Words and expressions used in the Acts shall, in these regulations, have the same meaning as is assigned to them in the Acts. 3.

(1)The competent authority shall, in line with the calculation methodology determined by ESMA in the regulatory technical standards adopted in accordance with Article 57

(3)of MiFID, set and apply limits on the size of a net position which a person can hold at all times in agricultural commodity derivatives and critical or significant commodity derivatives that are traded on trading venues, and in economically equivalent OTC contracts: Provided that commodity derivatives shall be considered to be critical or significant where the sum of all net positions of end position holders constitutes the size of their open interest and is at a minimum of 300,000 lots on average over a one-year period.

(2)The limits referred to in sub-regulation

(1)shall be set based on all positions held by a person and those held on his or her behalf at an aggregate group level in order to: (

1. a)prevent market abuse; (
2. b)support orderly pricing and settlement conditions, including preventing market distorting positions, and ensuring, in particular, convergence between prices of derivatives in the delivery month and spot prices for the underlying commodity, without prejudice to price discovery on the market for the underlying commodity.

(3)The position limits referred to in sub-regulation

(1)shall not apply to: (

1. a)positions held by, or on behalf of, a non-financial entity, and which are objectively measurable as reducing risks directly relating to the commercial activity of that non-financial entity; (
2. b)positions held by, or on behalf of, a financial entity that is part of a predominantly commercial group and is acting on behalf of a non-financial entity of the Position limits in commodity derivatives and position management controls in commodity derivatives and derivatives of emission allowances. Amended by: L.N. 89 of 2022; L.N. 219 of 2025. 4 [ S.L.370.36 POSITION LIMITS AND POSITION MANAGEMENT CONTROLS IN COMMODITY DERIVATIVES AND REPORTING predominantly commercial group, where those positions are objectively measurable as reducing risks directly relating to the commercial activity of that nonfinancial entity; Cap. 370. (
3. c)positions held by financial and non-financial counterparties for positions that are objectively measurable as resulting from transactions entered into to fulfil obligations to provide liquidity on a trading venue as referred to in point (
4. c)of the fourth subparagraph of Article 2

(4)of MiFID; (

1. d)any other securities as referred to in point (
2. c)of point 1 to the Second Schedule of the Investment Services Act which relate to a commodity or an underlying asset as referred to in point 10 of the Second Schedule to the Investment Services Act.

(4)Position limits shall specify clear quantitative thresholds for the maximum size of a position in a commodity derivative that persons can hold.

(5)The competent authority shall set position limits for critical or significant commodity derivatives and agricultural commodity derivatives that are traded on trading venues, based on the calculation methodology laid down in the regulatory technical standards adopted by the European Commission pursuant to Article 57

(3)of MiFID. Such position limits shall include economically equivalent OTC contracts.

(6)The competent authority shall review the position limits referred to in sub-regulation

(1)where there is a significant change on the market, including a significant change in deliverable supply or open interest, based on its determination of deliverable supply and open interest, and reset those position limits in accordance with the calculation methodology laid down in the regulatory technical standards adopted by the European Commission pursuant to Article 57

(3)of MiFID.

(7)The competent authority shall notify ESMA of the exact position limits it intends to set in accordance with the methodology for calculation as established by ESMA in the regulatory technical standards issued for that purpose in accordance with Article 57

(3)of MiFID.

(8)The competent authority shall modify the position limits in accordance with ESMA’s opinion or provide ESMA with justification why the change is considered to be unnecessary: Provided that where the competent authority imposes limits contrary to an ESMA opinion, it shall immediately publish on its website a notice fully explaining its reasons for doing so. POSITION LIMITS AND POSITION MANAGEMENT CONTROLS IN COMMODITY DERIVATIVES AND REPORTING [ S.L.370.36

(9)Where: (

1. i)agricultural commodity derivatives based on the same underlying product and sharing the same characteristics are traded in significant volumes on trading venues in more than one jurisdiction; or (
2. ii)critical or significant commodity derivatives based on the same underlying commodity and sharing the same characteristics are traded on trading venues in more than one jurisdiction; and the largest volume of trading takes place in Malta, the competent authority (as the central competent authority) shall set the single position limit to be applied on all trading in those derivatives. The competent authority shall consult the European regulatory authorities of other trading venues on which those agricultural commodity derivatives are traded in significant volumes or on which those critical or significant commodity derivatives are traded, on the single position limit to be applied and any revisions to that single position limit: Provided that where the competent authority and the European regulatory authorities of the other trading venues do not agree, they shall state in writing the full and detailed reasons why they consider that the requirements prescribed in sub-regulations

(1)to

(3)are not met. ESMA will settle any dispute arising from a disagreement between competent authorities in accordance with its powers under Article 19 of Regulation (EU) No 1095/2010.

(10)(

1. i)Where: agricultural commodity derivatives based on the same underlying product and sharing the same characteristics are traded in significant volumes on trading venues in more than one jurisdiction; or (
2. ii)critical or significant commodity derivatives based on the same underlying commodity and sharing the same characteristics are traded on trading venues in more than one jurisdiction; and the largest volume of trading does not take place in Malta, and the competent authority disagrees with the setting of the single position limit by a European regulatory authority which qualifies as a central competent authority, it shall state in writing the full and detailed reasons why it considers that the requirements laid down in sub-regulation

(1)to

(3)are not met: Provided that ESMA shall settle any dispute arising from a disagreement between competent authorities in accordance with its powers under Article 19 of Regulation (EU) No 1095/2010. 5 6 POSITION LIMITS AND POSITION MANAGEMENT CONTROLS IN COMMODITY DERIVATIVES AND REPORTING [ S.L.370.36

(11)Where the MFSA is the competent authority of the trading venues in the case of: (

1. i)agricultural commodity derivatives that are based on the same underlying product and that share the same characteristics are traded in significant volumes; or (
2. ii)critical or significant commodity derivatives that are based on the same underlying commodity and that share the same characteristics; are traded, it shall put in place cooperation agreements with the European regulatory authorities of the position holders in the derivatives mentioned in points (
3. i)or (ii), which shall include the exchange of relevant data, in order to enable the monitoring and enforcement of the single position limit.

(12)Where the MFSA is the competent authority of the position holders in: (

1. i)agricultural commodity derivatives that are based on the same underlying product and that share the same characteristics are traded in significant volumes; or (
2. ii)critical or significant commodity derivatives that are based on the same underlying commodity and that share the same characteristics; which are traded on a trading venue, it shall put in place cooperation agreements with the European regulatory authorities of such trading venues where the derivatives mentioned in points (
3. i)or (
4. ii)are being traded, which shall include the exchange of relevant data, in order to enable the monitoring and enforcement of the single position limit.

(13)An investment firm or a market operator operating a trading venue which trades in commodity derivatives or derivatives of emission allowances shall apply position management controls, including powers for the trading venue to: (

1. a)monitor the open interest positions of persons; (
2. b)obtain information, including all relevant documentation, from persons about the size and purpose of a position or exposure entered into, information about beneficial or underlying owners, any concert arrangements, and any related assets or liabilities in the underlying market including, where appropriate, positions held in derivatives of emission allowances or positions held in commodity derivatives that are based on the same underlying and that share the same characteristics on POSITION LIMITS AND POSITION MANAGEMENT CONTROLS IN COMMODITY DERIVATIVES AND REPORTING [ S.L.370.36 other trading venues and in economically equivalent OTC contracts through members and participants; (
3. c)request a person to terminate or reduce a position, on a temporary or permanent basis, and to unilaterally take action to ensure the termination or reduction of the position where the person does not comply with such request; and (
4. d)require a person to provide, on a temporary basis, liquidity back into the market at an agreed price and volume with the express intent of mitigating the effects of a large or dominant position.

(14)The position limits and position management controls shall be transparent and non-discriminatory, specifying how they apply to persons and taking account of the nature and composition of market participants and of the use they make of the contracts submitted to trading.

(15)The Maltese investment firm or market operator operating the trading venue shall inform the competent authority of the details of position management controls. The competent authority shall communicate the same information as well as the details of the position limits it has established to ESMA.

(16)The competent authority shall not impose limits which are more restrictive than those adopted pursuant to sub-regulations

(1)to

(3)except in exceptional cases where they are objectively justified and proportionate taking into account the liquidity of the specific market and the orderly functioning of that market.

(17)The competent authority shall publish on its website the details of the more restrictive position limits it decides to impose in accordance with sub-regulation

(18), which shall be valid for an initial period not exceeding six months from the date of their publication on the website. The more restrictive position limits may be renewed for further periods not exceeding six months at a time if the grounds for the restriction continue to be applicable. If not renewed after that six-month period, they shall automatically expire.

(18)Where the competent authority decides to impose more restrictive position limits, it shall notify ESMA. The notification shall include a justification for the more restrictive position limits: Provided that where the competent authority imposes limits contrary to an ESMA opinion, it shall immediately publish on its website a notice fully explaining its reasons for doing so.

(19)The competent authority shall impose administrative penalties and other administrative measures in terms of regulation 7 for the infringements of position limits set in accordance with this regulation to: 7 8 POSITION LIMITS AND POSITION MANAGEMENT CONTROLS IN COMMODITY DERIVATIVES AND REPORTING [ S.L.370.36 (

1. a)positions held by persons situated or operating in Malta or abroad which exceed the limits on commodity derivative contracts the competent authority has set in relation to contracts on trading venues situated or operating in Malta or economically equivalent OTC contracts; (
2. b)positions held by persons situated or operating in Malta which exceed the limits on commodity derivative contracts set by European competent authorities in other Member States or EEA States.

(20)Notwithstanding the provisions of any other law, the provisions of this regulation shall also apply to persons as referred to in regulation 3

(1)(a), (d), (f), (g), (m), (p), (

1. r)and (
2. aa)to (
3. ee)of the Investment Services Act (Exemption) Regulations that are exempt from the licensing requirement established under article 3 of the Investment Services Act in accordance with the said regulation. Position reporting by categories of position holders. Amended by: L.N. 89 of 2022; L.N. 219 of 2025. 4.

(1)A Maltese investment firm or a market operator operating a trading venue which trades in commodity derivatives or in derivatives of emission allowances shall: (a) make public: (i) for trading venues where options are traded, two

(2)weekly reports, one of which is to exclude options, with the aggregate positions held by the different categories of persons for the different commodity derivatives or derivatives of emission allowances traded on their trading venue, specifying the number of long and short positions by such categories, changes thereto since the previous report, the percentage of the total open interest represented by each category, and the number of persons holding a position in each category in accordance with sub-regulation

(5); (

1. ii)for trading venues where options are not traded, a weekly report on the elements established in sub-paragraph (i); and (
2. b)provide the competent authority with a complete breakdown of the positions held by all persons, including the members or participants and the clients thereof, on that trading venue, at least on a daily basis.

(1a)An investment firm or a market operator operating a trading venue which trades in commodity derivatives or in derivatives of emission allowances shall communicate the reports referred to in paragraph (a) of sub-regulation

(1)to the competent POSITION LIMITS AND POSITION MANAGEMENT CONTROLS IN COMMODITY DERIVATIVES AND REPORTING [ S.L.370.36 authority and to ESMA.

(2)The Maltese investment firm or market operator operating a trading venue as referred to in sub-regulation

(1)shall be required to provide the competent authority with the information referred to in sub-regulation

(1)(b) only when both the number of persons and their open positions exceed minimum thresholds: Provided that position reporting as required in subregulation

(1)shall not be applicable to any other securities as referred to in point (c) of point 1 to the Second Schedule of the Investment Services Act that relate to a commodity or an underlying asset as referred to in point 10 of the Second Schedule to the Investment Services Act.

(3)Maltese investment firms trading in commodity derivatives or in derivatives of emission allowances outside a trading venue shall provide, at least on a daily basis: (a) the competent authority, in line with its role as central competent authority in terms of regulation 3

(9); or, (b) if there is no central competent authority, the competent authority of the trading venue where the commodity derivatives or the derivatives of emission allowances are traded; with a complete breakdown of their positions taken in economically equivalent OTC contracts as well as of those of their clients and the respective clients of those clients until the end client is reached, in accordance with Article 26 of Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Regulation (EU) No 648/2012 and, where applicable, of Article 8 of Regulation (EU) No 1227/2011.

(4)In order to enable monitoring of compliance with regulation 3

(1)to

(3)of these regulations, members or participants of regulated markets, MTFs and clients of OTFs shall report to the investment firm or market operator operating that trading venue the details of their own positions held through contracts traded on that trading venue at least on a daily basis, as well as those of their clients and the clients of those clients until the end client is reached.

(5)Persons holding positions in a commodity derivative or in a derivative of emission allowance shall be classified by the investment firm or market operator operating that trading venue according to the nature of their main business, taking account of any applicable authorisation, as either: (

1. a)investment firms or credit institutions; Cap. 370. 9 10 POSITION LIMITS AND POSITION MANAGEMENT CONTROLS IN COMMODITY DERIVATIVES AND REPORTING [ S.L.370.36 (
2. b)investment funds, either an undertaking for collective investments in transferable securities (UCITS) as defined in Directive 2009/65/EC, or an alternative investment fund manager as defined in Directive 2011/61/EC; (
3. c)other financial institutions, including insurance undertakings and reinsurance undertakings as defined in Directive 2009/138/EC, and institutions for occupational retirement provision as defined in Directive 2003/41/EC; (
4. d)commercial undertakings; (
5. e)in the case of derivatives of emission allowances, the reporting shall not prejudice the compliance obligations under Directive 2003/87/EC.

(6)The reports referred to in sub-regulation

(1)(a) shall specify the number of long and short positions by category of persons, any changes thereto since the previous report, percent of total open interest represented by each category, and the number of persons in each category.

(7)The reports referred to in sub-regulation

(1)(a) and the breakdowns referred to in sub-regulation

(3)shall differentiate between: (

1. a)positions identified as positions which in an objectively measurable way reduce risks directly relating to commercial activities; and (
2. b)other positions.

(8)Notwithstanding the provisions of any other law, the provisions of this regulation shall also apply to persons as referred to in regulation 3

(1)(a), (d), (f), (g), (m), (p), (

1. r)and (
2. aa)to (
3. ee)of the Investment Services Act (Exemption) Regulations that are exempt from the licensing requirement established under article 3 of the Investment Services Act in accordance with the said regulation. Powers of the competent authority. 5. The competent authority may: (
4. a)request any person to take steps to reduce the size of the position or exposure; and (
5. b)limit the ability of any person from entering into a commodity derivative, including by introducing limits on the size of a position any person can hold at all times in accordance with regulation 4 of these regulations. Notifications. 6.

(1)The competent authority shall notify ESMA POSITION LIMITS AND POSITION MANAGEMENT CONTROLS IN COMMODITY DERIVATIVES AND REPORTING [ S.L.370.36 11 and other European regulatory authorities of the details of: (

1. a)any requests to reduce the size of a position or exposure pursuant to regulation 5(a); (
2. b)any limits on the ability of persons to enter into a commodity derivative pursuant to regulation 5(b).

(2)The notification shall include, where relevant, the details of the request or the demand pursuant to article 32 of the Financial Markets Act, and article 13 of the Investment Services Act, including the identity of the person or persons to whom it was addressed and the reasons therefor, as well as the scope of the limits introduced pursuant to regulation 5(b) including the person concerned, the applicable financial instruments, any limits on the size of positions the person can hold at all times, any exemptions granted thereto, and the reasons therefor in accordance with regulation 3 and the reasons therefor. Cap. 345 Cap. 370.

(3)The notifications referred to in sub-regulation

(2)shall be made not less than 24 hours before the actions or measures are intended to take effect. In exceptional circumstances, the competent authority may make the notification less than 24 hours before the measure is intended to take effect where it is not possible to give 24 hours’ notice.

(4)Where the competent authority receives a notification from another European regulatory authority pursuant to Article 79

(5)of MiFID, it may take measures in accordance with regulation 5(

1. a)or (
2. b)where it is satisfied that the measure is necessary to achieve the objective of the other European regulatory authority.

(5)Where the competent authority proposes to take measures in accordance with regulation 5(a) or (b), it shall also give notice in accordance with the provisions of this regulation.

(6)When an action under sub-regulation

(1)(

1. a)or (
2. b)relates to wholesale energy products, the competent authority shall also notify the Agency Cooperation of Energy Regulators (ACER) established under Regulation (EC) No 713/2009. 7.

(1)Where a person falling within the scope of these regulations fails to comply with any provisions of such regulations or any rules issued thereunder further implementing such regulations, the competent authority may, by notice in writing and without recourse to a court hearing, impose on such person an administrative penalty and other administrative measures in accordance with the provisions of the Financial Markets Act (MiFID and MiFIR Administrative Penalties, Measures and Investigatory Powers) Regulations, 2017 or the Investment Services Act and Banking Act (MiFID and MiFIR Administrative Penalties, Measures and Investigatory Powers) Regulations, 2017. Administrative Penalties, other administrative measures and Appeals. L.N. 392 of 2017. L.N. 401 of 2017. 12 Cap. 345. Cap. 370. [ S.L.370.36 POSITION LIMITS AND POSITION MANAGEMENT CONTROLS IN COMMODITY DERIVATIVES AND REPORTING

(2)A right of appeal to the Financial Services Tribunal shall lie from the decisions which the competent authority shall take under these regulations and the provisions of Part VI of the Financial Markets Act or article 19 of the Investment Services Act shall apply mutatis mutandis.