[ESMA70-155-13071 ] Opinion on position limits on CORN contract

ESMA has assessed the position limits proposed by the AMF (eventid=20981) based on their compatibility with the objectives and methodology of MiFID II.
ESMA concluded that the proposed limits comply with the methodology established in RTS 21a and are consistent with the objectives of Article 57 of MiFID II.
The AMF has set two position limits for the spot month, and other months. The spot month limit has been set based on the overall open interest, while the other months’ limit is based on open interest during the preceding year. The MATIF corn contract, which is considered as the benchmark for the European underlying physical market in corn, settles in lots, with a lot being equivalent to 50 tons of underlying.
Position limits are an important risk management tool used by regulators to reduce the risk of market manipulation and promote market integrity. They are limits on the size of a position that a trader or group of traders can hold in a particular commodity or financial instrument. In the case of corn futures and options, position limits are designed to ensure that traders cannot corner the market or create artificial scarcity by holding large positions that can influence the price of corn.