ISDA, the Association for Financial Markets in Europe and FIA have published a position paper on the European Commission’s market correction mechanism proposal for natural gas prices in the European Union. The proposed mechanism would set a price cap on the TTF front-month future contract price when certain conditions are met.
The associations urge policymakers to avoid imposing any price cap on the wholesale gas market and instead focus effort on securing supply, reducing demand, supporting the liquidity needs of energy firms and accelerating the energy transition.
The paper highlights the detrimental implications that the proposed mechanism would have on liquidity and risk management, and warns that it would introduce unacceptable levels of systemic and operational risk while not necessarily achieving the primary policy objective to reduce power and gas prices for consumers. The paper also asserts that this measure could undermine trust in the European gas market, discouraging market participant activity.
Click on the attached PDF to read the paper.
Documents (1) for ISDA, AFME and FIA Paper on EC Market Correction Mechanism Proposal
Latest
ISDA, GFXD, UK Finance, LMA Respond to HMT on UK BMR Reform
On March 11, ISDA, the Global Foreign Exchange Division of the Global Financial Markets Association, UK Finance and the Loan Market Association responded jointly to a consultation from His Majesty’s Treasury on the future regulatory regime for benchmarks and benchmark...
ISDA Recommendations to Simplify EU Regulation
On March 9, ISDA submitted a paper to the European Commission setting out focused proposals to improve the functioning of the EU regulatory framework for derivatives. The paper comprises eight targeted recommendations to simplify selected Level 1 provisions in a...
New Selection Process for Standard Reference Obligations (SROs) FAQs
This Frequently Asked Questions (“FAQ”) document gives information about the new selection process for Standard Reference Obligations (SROs). Note that ISDA may update these FAQs on occasion. Please check back periodically for new versions.
Refreshing the FX Definitions
A lot has changed in the FX derivatives market since 1998, when the last set of standard definitions for FX transactions were published. Trading volumes have grown substantially, and average daily turnover has risen by six times. Market practices have...