This week ICE Futures Abu Dhabi published (click here) an update to their Delivery Limits & Position Limits Guidance (the revised 10-page document may be found here).
What is it about?
- ICE Futures Abu Dhabi have updated their position limit guidelines to include more detail regarding its approach to position limits, and the exemption process available to Members and their customers if certain eligibility criteria are met;
- While a new(-ish) and nascent market, ICE Futures Abu Dhabi carries the ICE Murban Futures Contract which continues to grow in both size and relevance in global oil markets – firms actively trading this contract must however comply with the position limit regime instituted by the exchange;
- The updated Guidance has not resulted in any change to either the Delivery Limit or the Position Limit for the ICE Murban Futures Contract however.
Despite the lack of a red-lined/track changes version of the old versus new Guidance, RegTrail has performed a comparison as highlighted below:
Section 1: Delivery Limits
[Amended] Text Change in "Delivery Limits”
Summary of Change: Language simplified from "shall take effect" to "takes effect" and from "will apply" to "applies."
October 2023 Guidance:
"The mandatory Delivery Limit imposed shall take effect at 1:30pm (UK), following expiry of the Contract on the day of expiry i.e. it will apply to the final position (either Long or Short) after taking into account all EFPs permissibly posted in respect of the Delivery month."
December 2024 Guidance:
"The mandatory Delivery Limit imposed takes effect at 1:30pm (UK), following expiry of the Contract on the day of expiry i.e. it applies to the final position (either Long or Short) after taking into account all EFPs permissibly posted in respect of the Delivery month."
Section 2: Position Limits
[New] Addition of Spot Month Limits:
Summary of Addition: Spot month position limit explicitly introduced in December 2024 Guidance along with consequences for breaches.
October 2023 Guidance:
Does not specify spot month limits explicitly.
December 2024 Guidance:
"No person may hold or control positions in the spot month period, net long or net short, in excess of the levels specified in this document, unless an exemption is obtained from the Exchange Market Oversight Department."
Section 3: Exemptions from Delivery Limits and Position Limits
[Amended] Procedures for Applying for Exemptions:
Summary of Change: Clarification added that applications for exemptions must be submitted to the "Market Oversight department," and the timing requirement is emphasized.
October 2023 Guidance:
"Applications for exemption must be made in writing to the Exchange Compliance department as soon as the applicant believes that it is likely to exceed the Delivery Limit but in the case of Delivery Limits, five days prior to the expiry of the previous contract month."
December 2024 Guidance:
"Applications for exemptions to either the Delivery Limits or Position Limits must be made in writing to the Exchange Market Oversight department as soon as the applicant believes that it is likely to exceed the Delivery Limit, and in the case of Delivery Limits, applications must be submitted no later than five days prior to expiry of the previous contract month."
Section 4: Breaches to Exchange Limits
[New] Introduction of Detailed Procedures for Addressing Breaches:
Summary of Addition: December 2024 Guidance introduces a structured approach to managing breaches, including FSRA notifications, Participant actions, and potential consequences.
October 2023 Guidance: No detailed breach management process specified.
December 2024 Guidance: Includes a new section on breaches:
"Once a breach of the Position Limit is identified by the Exchange, the FSRA [i.e. Abu Dhabi’s Financial Services Regulatory Authority] will be immediately provided with a notification of the breach together with details of the Participant holding the position."
"The Exchange will notify the Participant that they have breached the Position Limit and that the position must be reduced in an appropriate manner without causing undue instability in the market."
Section 5: LGTR Position Reporting
[Amended] Reporting Time Requirement
Summary of Change: Specific deadline (2pm UK time) added for daily reporting in December 2024 Guidance.
October 2023 Guidance:
"Positions above the required LGTR thresholds must be reported on a daily basis."
December 2024 Guidance:
"Positions above the required LGTR thresholds must be reported on a daily basis by 2pm (UK time)."
Section 6: Additional Instructions
[New] Addition of a Confidentiality Clause:
Summary of Addition: December 2024 Guidance formalizes a confidentiality framework for data handling.
October 2023 Guidance:
Confidentiality clause not explicitly defined.
December 2024 Guidance:
"All data is held in accordance with Rule A.4. Access to data pertaining to Member and client positions is normally restricted to the Exchange Market Oversight department."
