[ESMA74-1865191303-15385 ] Opinion on position limits on Fish Pool Farmed Salmon contract

ESMA issued an opinion concerning position limits for the Fish Pool Farmed Salmon contract. ESMA’s consideration was based on a notification received from the Norwegian Finanstilsynet under MiFID II.
The Farmed Salmon contract is classified as an agricultural commodity with a seafood sub-product, traded on the FISH POOL ASA trading venue.
Macroeconomic factors, particularly currency fluctuations (EUR/NOK and USD/EUR), were identified as influential in the international salmon market. The opinion discussed the characteristics and lifecycle of farmed salmon, which is harvested in different quality categories.
The Farmed Salmon derivative market was detailed, explaining that the contract is cash-settled and based on the Fish Pool Index. The underlying commodity qualifies as food for human consumption, and contracts have monthly maturities with trading taking place in lots of 1 Metric Tonne. Market participants in this derivative market primarily consist of European fundamental players.
In 2020, ESMA already issued an opinion with 23,400 lots for the spot month and 20,800 lots for the other months (eventid=8016).
The proposed position limits by the competent authority, Finanstilsynet, were provided. For the spot month, the position limit was set at 5,951 lots (5% of deliverable supply), while for other months, it was set at 15,837 lots (35% of total open interest). The rationale for these limits was explained, considering factors such as open interest, deliverable supply, and market-making activity.
ESMA’s assessment focused on the compatibility of these proposed limits with the methodology defined in RTS 21a and their alignment with the objectives of MiFID II, which aim to prevent market abuse and ensure orderly market conditions. ESMA concluded that the proposed limits met these criteria and advised Finanstilsynet to closely monitor market developments.