Subject to testing and regulatory approval, Nasdaq Commodities is announcing changes to its Trading and Clearing Rules, effective November 20, 2017.
This notice includes a high level summary of the most significant amendments of the Trading and Clearing Rules of Nasdaq Commodities due to MiFID II and MiFIR. Please note that additional changes, including minor and editorial changes, may not be mentioned herein but can be found in the full text versions available via the link below.
The amendments of the Trading and Clearing Rules are incorporated in the following rulebook texts:
- Trading Rules General Terms
- Joint Trading and Clearing Appendix 1 Definitions
- Joint Trading and Clearing Appendix 2 Contract Specifications
- Trading Appendix 4 Trading Procedures
- Trading Appendix 4A Direct Market Access and Sponsored Access (new)
- Trading Appendix 5 ETS User Terms
- Joint Trading and Clearing Appendix 6 Market Conduct Rules
- Trading Appendix 8 Block Trade Facility Procedure
- Clearing Rules General Terms
- Clearing Appendix 4 Non Exchange Clearing Procedures (not in use)
- Clearing Appendix 14 Block Trade, EFS and EFP Clearing Procedures
- Clearing Appendix 15 Third Party Exchange Transaction Clearing Procedures
These drafts include all amendments due to MiFID II and MiFIR regardless of the effective date of the relevant changes.
Currently we foresee these changes to be implemented with effective dates on the 20 November 2017, 2 and 3 January 2018 in conjunction with system releases of various functionality in Genium INET.
For some changes, particular the pre-trade transparency requirements, the effective dates are dependent on the adoption and entry into force of a Norwegian regulation implementing the same or equivalent requirements as MiFIR on the 3 January 2018. If the implementation of the Norwegian regulation is delayed, a later effective date of these sections of the rulebook will be published in due time.
Further, the position limits and position reporting requirements will not take effect for members of Nasdaq Oslo ASA until MiFID II is implemented and has entered into force in Norwegian law. Notification of the effective date will be published in due time.
Where the rules take effect on a later date than the 20 November, this is specified with footnotes in the rulebook text.
In some areas, rulebook drafts might be further developed subject to discussions with regulators (i.e pre-trade transparency and deferred publications).
Trading Rules
Trading Rules General Terms
The Exchange’s right to receive and retrieve information and documentation from Exchange Members has been clarified throughout the Trading Rules General Terms in order to ensure necessary compliance with MiFID II.
Section 4.2.7 has been updated with a requirement on Exchange Members to at all time keep the Exchange informed of its LEI code.
Section 6 has been updated with various requirements related to market making, including an obligation on Exchange Members who are investment firms to notify the Exchange and enter into a market making agreement when pursuing a market making strategy as defined in MiFID II. A section has been added to clarify the requirements that will apply for a Market Maker that wants to put the market making volume aside for the purpose of the ancillary activity threshold (Privileged Transactions).
Joint Trading and Clearing Appendix 1 Definitions
The Definitions list has been updated with various new terms introduced by the amended rules.
Joint Trading and Clearing Appendix 2 Contract Specifications
The Contract Specifications Part A General Provisions section 3 has been amended with specifications applying to the listing of new products.
Trading Appendix 4 Trading Procedures
Section 7 has been updated with requirements on Exchange Members regarding pre-trade and post-trade controls, including kill functionality.
Section 8 have been updated with various rules and requirements regarding order information, automatic mechanisms to prevent disorderly trading, order-to-trade ratio, order throttling and order monitoring.
Section 6.6 has been updated with requirements on cross trades.
Sections 9, 10 and 11 have been updated with various requirements and clarifications on exchange transactions, including reported trades.
Section 15 has been updated with various requirements and clarifications on deferred publication.
Trading Appendix 4A Direct Market Access and Sponsored Access (new)
This new Trading Appendix 4A Direct Market Access and Sponsored Access has been added with various requirements regarding Direct Electronic Access, including Direct Market Access and Sponsored Access.
Trading Appendix 5 ETS User Terms
Section 3.6 et seq. of Trading Appendix 5 ETS User Terms has been updated with requirements on conformance testing.
A new Section 3A has been amended with various requirements related to algorithmic trading, including technical equipment and certification.
A new Section 4 has been amended with various requirements related to Automated Order Routing.
Joint Trading and Clearing Appendix 6 Market Conduct Rules
Section 2 has been updated with various reporting requirements on Block Trades, EFPs and EFSs.
Section 3 has been updated with various position reporting requirements.
Section 4 sets out the powers of the Exchange for the position management controls.
Please note that section 3 and 4 does not take effect in the rules before MiFID II has entered into force in Norwegian law and made applicable for Nasdaq Oslo ASA.
Trading Appendix 8 Block Trade Facility Procedure
Trading Appendix 8 Block Trade Facility Procedure Section 1, 2, 5 and 6 has been updated with various requirements and clarifications on exchange transactions, including reported trades.
Clearing Rules
A number of amendments have been made to the Clearing Rules in relation to the implementation of RTS 26 specifying the obligation to clear derivatives traded on regulated markets and timing of acceptance for clearing, as further set out below.
Clearing Rules General Terms
Section 4.1.5 of the Clearing Rules General Terms implements Art 1 of RTS 26.
Section 4.1.6 of the Clearing Rules General Terms implements Art 5 (3) of RTS 26.
Sections 4.2 of the Clearing Rules General Terms have been updated to ensure that the Clearinghouse meets the requirements under Art 2.1(a)-(c) of RTS 26 in order to ensure certainty of clearing.
Clearing Appendix 4 Non Exchange Clearing Procedures (currently not in use)
A section 5.3 has been amended to implement Art 4 of RTS 26 in relation to time frames for the transfer of information for cleared derivative transactions concluded on a bilateral basis.
NB please be aware that this Clearing Appendix 4 Non Exchange Clearing Procedures is not in use as Nasdaq Commodities is currently not listing any contracts for clearing that are not listed and also traded on an Exchange (either electronic orderbook or reported trades)
Clearing Appendix 14 Block Trade, EFS and EFP Clearing Procedures
Sections 2.1 and 3.3 have been updated to ensure that the Clearinghouse meets the requirements under Art 2.1(a)-(c) of RTS 26 in order to ensure certainty of clearing.
A section 3.4 has been updated such that in the event a registration is rejected, the Clearinghouse shall immediately notify the relevant clearing member or affected party.
Clearing Appendix 15 Third Party Exchange Transaction Clearing Procedures
A section 3.3 has been updated to ensure that the Clearinghouse meets the requirements under Art 2.1(a)-(c) of RTS 26 in order to ensure certainty of clearing.
Previous sections 3.3 – 3.8 have been deleted to reflect that the Prenovation Checks are removed due to the requirements of RTS 26.
A section 3.5 has been updated such that in the event a registration is rejected, the Clearinghouse shall immediately notify the relevant clearing member or affected party.
For updated rulebooks and appendices please see:
http://www.nasdaqomx.com/commodities/Marketaccess/legalframework/upcoming-changes-to-rules
The updated Genium INET Market Model Nasdaq Commodities will be published in due course.
For further information, please contact Nasdaq Commodities:
Mette Steinsland, AVP Head of Legal Nasdaq Commodities, phone +47 6752 8071, mette.steinsland@nasdaq.com
Media contact:
Sara Aadnesen, Head of Corporate Communication, phone +47 9060 0759, sara.aadnesen@nasdaq.com
About Nasdaq
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About Nasdaq Commodities
Nasdaq Commodities is the brand name for the worldwide suite of commodity related products and services offered by Nasdaq. The Nasdaq Commodities offerings include power, natural gas and carbon emission markets, tanker and dry cargo freight, fuel oil, seafood derivatives, iron ore, electricity certificates and clearing services.
Nasdaq Oslo ASA is the commodity derivatives exchange authorized by the Norwegian Ministry of Finance and supervised by the Norwegian Financial Supervisory Authority. All trades with Nasdaq Oslo ASA are subject to clearing with Nasdaq Clearing.
About Nasdaq Clearing
Nasdaq Clearing is the trade name of Nasdaq Clearing AB which is authorized and supervised as a multi-asset clearinghouse by the Swedish Financial Supervisory Authority in Sweden as well as authorized to conduct clearing operation in Norway by the Norwegian Ministry of Finance.
For more information, visit www.nasdaqomx.com/commodities
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