Recital 13

(13)The standard baseline of 25 % of deliverable supply and of open interest has been set with reference to the experience of other markets and other jurisdictions. The baseline should be adjusted by competent authorities to enable it to be reduced by a maximum of 20 % (or 22,5 % in the case of some agricultural commodity derivatives) and to be increased by a maximum of 10 % (or 15 % in the case of less liquid commodity derivatives) should the characteristics of the market require it, such as an absence of market participants, in order to support the orderly settlement and functioning of the contract and its underlying market. Since any adjustment to the baseline figure applies only where, and for so long as, objective characteristics of the market require it, temporary adjustments to the baseline should be therefore possible. Competent authorities should ensure that an adjustment downwards of the baseline is effected whenever it is necessary to prevent dominant positions and to support orderly pricing in the commodity derivative and in the underlying commodity. The range reflects that Directive 2014/65/EU covers a wider range of commodity derivatives and markets than other markets and jurisdictions. The definition of commodity derivative under Article 2(1)(30) of Regulation (EU) No 600/2014 of the European Parliament and of the Council ² is broad, comprising also securitised derivatives and cash settled derivatives which do not have a tangible underlying such as climatic variables. For securitised derivatives the concept of spot and other months' does not apply. For derivatives without a tangible underlying the deliverable supply cannot be used to establish a position limit. Therefore competent authorities should be able to enhance or adjust the methodologies to determine position limits for these commodity derivatives based on different parameters like number of securities issued or the use of open interest also for the spot month.