Risk glossary


Position limits

Limits to the size of a single counterparty’s exposure to a single contract or risk factor. Position limits are commonly applied by derivatives exchanges but, more recently, have been legislated for under both the US Dodd-Frank Act and and the European Union (EU)’s Markets in Financial Instruments Directive II (MiFID II). The usefulness and exact definition and level of position limits is controversial.

* see also speculative position limits

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