Company: DBE
Filing Date: 2025-02-26
Form Type: 10-K
Source: 0000950170-25-027264
Chunk: 40

Company: Invesco DB Energy Fund
Filing Date: 2025-02-26
Form: 10-K
Item: Item 1A
Chunk 40
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 limits could reduce liquidity in the market, which would be likely to have adverse effects on the pricing of commodity futures contracts. Changes in CFTC and/or exchange-level position limits rules therefore could adversely affect the Fund’s ability to pursue its investment objective or achieve favorable performance.

Position Aggregation. In general, a trader is required by CFTC or exchange rules, as applicable, to aggregate all positions in accounts as to which the trader has 10% or greater ownership or control. CFTC and exchange rules provide exemptions from this requirement. For example, a trader is not required to aggregate positions in multiple accounts that it owns or controls if that trader is able to satisfy the requirements of an exemption from aggregation of those accounts.

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The CFTC amended its position aggregation rules in December 2016. The CFTC staff subsequently issued time-limited no-action relief from compliance with certain requirements under the amended aggregation rules, including the general requirement to aggregate positions in the same commodity futures contracts traded pursuant to substantially identical trading strategies. This no-action relief expires on August 12, 2025.

Since coming into effect on January 3, 2018, Markets in Financial Instruments Directive II (“MiFID II”), as implemented in the European Economic Area (“EEA”) and the United Kingdom (“UK”), requires the competent authorities of member states in the EEA and the UK to impose position limits on certain commodity derivatives contracts which are applicable to any person, whether or not based in the EEA or the UK. Pursuant to laws and regulations that implemented MiFID II in the UK, the UK regulatory authority, the Financial Conduct Authority (“FCA”), has established position limits applicable to, among other commodity derivative contracts, aluminum, copper, lead, nickel, tin and zinc commodity derivative contracts traded on the London Metal Exchange (“LME”). LME may also impose accountability levels in certain contracts, where further directions in respect of those positions can then be required. If the Fund were to trade commodity derivatives contracts on other exchanges in the EEA or the UK, position limits may apply to such trading activity pursuant to the relevant national laws and regulations that implemented MiFID II. On January 31, 2020, the UK formally withdrew from the European Union (“EU”) subject to a transition period that expired on December 31, 2020. At this time, it is difficult to predict what the longer-term economic, tax, fiscal, legal, regulatory, and other implications of the UK’s withdrawal from the EU will be