Procedure : 2016/3017(DEA)
Document stages in plenary
Document selected : B8-0148/2017

Texts tabled :

B8-0148/2017

Debates :

Votes :

PV 15/02/2017 - 7.8
CRE 15/02/2017 - 7.8

Texts adopted :


MOTION FOR A RESOLUTION
PDF 265kWORD 66k
8.2.2017
PE598.474v01-00
 
B8-0148/2017

pursuant to Rule 105(4) of the Rules of Procedure


on Commission Delegated Regulation (EU) No .../... of 1 December 2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council with regard to regulatory technical standards for the application of position limits to commodity derivatives (C(2016) 4362 – 2016/3017(DEA))


Sven Giegold on behalf of the Verts/ALE Group

European Parliament resolution on Commission Delegated Regulation (EU) No .../... of 1 December 2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council with regard to regulatory technical standards for the application of position limits to commodity derivatives (C(2016) 4362 – 2016/3017(DEA))  
B8‑0148/2017

The European Parliament,

–  having regard to the Commission Delegated Regulation (EU) No .../... of 1 December 2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council with regard to regulatory technical standards for the application of position limits to commodity derivatives (C(2016)4362),

–  having regard to Article 290 of the Treaty on the Functioning of the European Union,

–  having regard to 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(1), in particular Article 57(3) and (12) thereof,

–  having regard to Article 13 of Regulation (EU) No 1095/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Securities and Markets Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/77/EC(2),

–  having regard to the outcome of the G20 summit in Pittsburgh of 24-25 September 2009,

–  having regard to the Commission communication of 28 October 2009 entitled ‘A better functioning food supply chain in Europe’ (COM(2009)0591),

–  having regard to the Commission communication of 2 February 2011 entitled ‘Tackling the challenges in commodity markets and raw materials’ (COM(2011)0025),

–  having regard to the communiqué of the G20 Finance Ministers and Central Bank Governors of 14-15 April 2011,

–  having regard to the International Organisation of Securities Commissions’ Principles for the Regulation and Supervision of Commodity Derivatives Markets of 11 September 2011,

–  having regard to the letter sent by Parliament’s rapporteur and the Chair of Parliament’s Economic and Monetary Affairs Committee to Commissioner Hill on 27 November 2015,

–  having regard to Rule 105(4) of its Rules of Procedure,

A.  whereas the G20 leaders met in Pittsburgh on 24-25 September 2009, in response to the financial crisis, and committed to improving the regulation, functioning and transparency of financial and commodity markets with a view to addressing excessive commodity price volatility;

B.  whereas the Commission communication ‘A better functioning food supply chain in Europe’ of 28 October 2009 acknowledged that in recent years prices along the food supply chain have fluctuated significantly, with these changes having caused considerable hardship for agricultural producers and having resulted in consumers not getting a fair deal, and therefore recommended enabling regulators to set position limits so as to counter disproportionate price movements or concentrations of speculative positions in order to ensure the efficient functioning of those markets;

C.  whereas the Commission communication ‘Tackling the challenges in commodity markets and raw materials’ of 2 February 2011 similarly acknowledged that commodity markets have displayed increased volatility and unprecedented movements in prices in recent years, with sharp price swings in all major commodity markets having been reflected in consumer prices and at times having led to social unrest and deprivation; whereas the Commission therefore recommended exploring the need for more systematic and detailed information on the trading activities of different types of market participants in commodity derivatives and more comprehensive oversight by regulators of commodity derivative positions, including the need for imposing position limits where necessary;

D.  whereas the communiqué of the G20 Finance Ministers and Central Bank Governors of 15 April 2011 welcomed the work of international organisations to address excessive price volatility in food and agricultural markets, and its impact on food security, and called on the International Organisation of Securities Commissions (IOSCO) to finalise recommendations on regulation and supervision in this area, in particular in order to address market abuse and manipulation, including the authority to set ex ante position limits where appropriate;

E.  whereas IOSCO’s Principles for the Regulation and Supervision of Commodity Derivatives Markets of 11 September 2011 state as one their key objectives that markets should be fair, efficient and transparent, and that this should be achieved by requiring that trading systems be subject to regulatory authorisation and continuing oversight, that regulation be designed to detect and deter manipulation and other unfair trading practices, and that regulation aim to ensure the proper management of large exposures, default risk and market disruption; whereas IOSCO therefore recommended that market authorities should have and use formal position management powers, including the power to set ex ante position limits;

F.  whereas Directive 2014/65/EU of the European Parliament and of the Council on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II) introduces a new harmonised position limits regime for derivative contracts in relation to commodities, representing the Union’s implementation of the G20 commitments made in Pittsburgh in 2009;

G.  whereas Article 57 of Directive 2014/65/EU requires Member States to ensure that competent authorities establish and apply position limits on the size of a net position which a person can hold at all times in commodity derivatives traded on trading venues and economically equivalent over-the-counter (OTC) contracts, in order to prevent market abuse and to support orderly pricing and settlement conditions, including preventing market distorting positions;

H.  whereas Article 57(3) of Directive 2014/65/EU empowers the European Securities and Markets Authority (ESMA) to develop draft regulatory technical standards, and delegates power to the Commission to adopt such standards, in order to determine the methodology for calculation that competent authorities are to apply in establishing the spot month position limits and other months’ position limits for physically settled and cash settled commodity derivatives based on the nature of the relevant derivative;

I.  whereas Commission Delegated Regulation (EU) No .../... of 1 December 2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council sets out the methodology for calculating position limits;

J.  whereas this methodology sets a baseline figure for the spot month position limit in a commodity derivative of 25 % of the deliverable supply for that commodity derivative, and for other months a position limit of 25 % of open interest in that commodity derivative, and then permits competent authorities to set the spot month and other months’ position limits for a commodity derivative by taking that baseline figure and adjusting it, according to the potential impact of certain factors, either as low as 5 % or as high as 35 %;

K.  whereas the methodology includes a derogation for any derivative contract with an underlying that qualifies as food intended for human consumption with a total combined open interest in spot and other months’ contracts exceeding 50 000 lots over a consecutive three-month period; whereas for these contracts the baseline figure for spot month position limits is proposed at 20 %; whereas competent authorities setting the specific limit are given discretion to set the baseline within the 2.5 % to 35 % range;

L.  whereas in comparison with the position limits regime in place in the United States of America, in which 25 % is the upper limit rather than the baseline and the average position limits are 10-15 %, the proposed methodology for Union position limits is very permissive; whereas effective limits as currently applied by trading venues in the US are much lower, with limits typically clustered around a 5 % to 15 % range;

M.  whereas, for the most sensitive and highly liquid food contracts, a baseline of 20 % does not fulfil the objective stated in Directive 2014/65/EU of preventing market abuse and supporting orderly pricing and settlement conditions, and therefore does not amount to the Union meeting the commitments signed up to by the G20 leaders in 2009;

N.  whereas Parliament’s negotiating team requested in its letter of 27 November 2015 that the regime send ‘a clear message to national competent authorities that they should set low position limits wherever liquidity allows’;

O.  whereas the final baseline and overall range for other contracts (5 % to 35 %) which are deemed to be liquid was already assessed to be too broad by the letter of 27 November, bearing in mind that an even more flexible special regime is provided for for contracts deemed to be illiquid (5 % to 40 %) and that the definition of an ‘illiquid’ contract is also potentially too broad;

P.  whereas Parliament’s negotiating team requested in the same letter to use deliverable supply as the basis for non-spot months limits; whereas the letter underlined that should ESMA and the Commission follow an approach based on open interest, then interest-based limits should be ‘considerably lower’;

Q.  whereas the delegated act as adopted includes a vague recommendation to competent authorities to adjust position limits ‘downwards’ or ‘upwards’ if the open interest is ‘significantly higher/lower’ than the deliverable supply; whereas the delegated act as adopted dilutes spot month limits by widening the definition of deliverable supply to include ‘any substitute grades or types of a commodity’;

R.  whereas Parliament’s negotiating team requested in the abovementioned letter that ‘contracts with highly correlated economic outcomes count towards the same position limit’; whereas the delegated act as adopted does not integrate this request and, in particular, the revised definition of economically equivalent over-the-counter contracts (EEOTC) and the definition of the ‘same commodity derivative’ remain excessively restrictive, opening the door to an easy circumvention of the position limits by introducing rather marginal changes in the contractual specifications of the commodity derivative;

S.  whereas, despite Parliament’s negotiating team’s explicit request, volatility has not been included as a factor to be taken into account when setting position limits at the same level as other relevant factors; whereas the Commission suggests instead that if a situation of excessive volatility arises, supervisors should consider a potential correction of the limit if further adjustment (up or down) of the limit might reduce such excessive volatility;

T.  whereas Parliament acknowledges that some of those concerns have been addressed, but not sufficiently for the delegated regulation to be considered to meet the ambitious objectives of the original legislation;

U.  whereas it should be possible for the Commission to make additional amendments to the draft delegated regulation in order to allay the concerns set out in Parliament’s letter, without the need for any delay in the overall implementation of Directive 2014/65/EU, which is due to come into effect on 3 January 2018; whereas, if the Commission were to make such changes, Parliament, without foregoing its scrutiny role, would consider the possibility of accelerating the approval procedure for an amended text;

1.  Objects to the Commission delegated regulation;

2.  Instructs its President to forward this resolution to the Commission and to notify it that the delegated regulation cannot enter into force;

3.  Calls on the Commission to submit a new delegated act which takes account of the above concerns;

4.  Instructs its President to forward this resolution to the Council and to the governments and parliaments of the Member States.

 

(1)

OJ L 173, 12.6.2014, p. 349.

(2)

OJ L 331, 15.12.2010, p. 84.

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