The same relates to the Article 72(1)(g) of the MiFID II Proposal as regards the remedies to be made available to competent authorities, which are given, within the limits provided for in their national legal frameworks, the power to “limit the ability of any person or class of persons from entering into a commodity derivative, including by introducing non-discriminatory limits on positions or the number of such derivative contracts per underlying which any given class of persons can enter into over a specified period of time, when necessary to ensure the integrity and orderly functioning of the affected markets” (underlining comes from an author).


Notwithstanding this, all remaining competences of the national authorities and ESMA will be able to severely impact carbon market as a whole as well as individual strategies.


ESMA will be only entitled to take a decision concerned if all of the following conditions are fulfilled:

(a) the measures listed address a threat to the orderly functioning and integrity of financial markets including in relation to delivery arrangements for physical commodities, or the stability of the whole or part of the financial system in the Union;

(b) a competent authority or competent authorities have not taken measures to address the threat or measures that have been taken do not sufficiently address the threat (the delegated act of the European Commission specifying the relevant criteria and factors is envisioned in that regard).


It is provided very short notice period - the notification of measures taken by ESMA shall be made not less than 24 hours before the measure is intended to take effect or to be renewed. In exceptional circumstances, ESMA may make the notification even less than 24 hours before the measure is intended to take effect where it is not possible to give 24 hours notice.


Considering the lack in the EU ETS of the general and permanent holding limit, as in its Californian counterpart, it is noteworthy that the measures available for ESMA under Article 35 of the MiFIR Proposal have ex post and temporary character. A said measure shall take effect when the notice is published or at a time specified in the notice that is after its publication and shall only apply in relation to a transaction entered into after the measure takes effect. ESMA is obliged, furthermore, to review its measures at appropriate intervals and at least every three months. If a measure is not renewed after that three month period, it shall automatically expire.


According to the Article 83(6) of the MiFID II Directive in relation to emission allowances, competent authorities should cooperate with public bodies competent for the oversight of spot and auction markets and competent authorities, registry administrators and other public bodies charged with the supervision of compliance under Directive 2003/87/EC in order to ensure that they can acquire a consolidated overview of emission allowances markets.


All these regulatory measures increase significantly the firepower available to regulatory authorities responsible for the supervision of the EU ETS, specifically in fighting frauds occurring sometimes on the carbon markets, but it seems that introducing clear and stable general position limits, as in the Californian cap-and-trade, would be more transparent and would give carbon market participants more legal certainty and confidence in the EU ETS.