Speaking after her colleague EU Energy Commissioner Kadri Simson in Brussels yesterday, EU Commissioner Financial Services, Financial Stability and Capital Markets Union Mairead McGuinness made clear that bailing out hedge funds and banks has priority over controlling gas prices. She presented a plan for regulating the TTF future market (sometime in the future) and for refunding utilities facing margin calls (immediately).
“We’re proposing a temporary measure as part of the emergency instrument: a so-called “intra-day price spike collar,” McGuinness said. “Now what this is about smoothing out is smoothing excessive volatility and price spikes in gas and electricity derivative markets.
“It is a price collar that limits extreme changes in a short period of time.
“And in that sense, it is not intended to prevent prices from moving upwards or indeed downwards, but rather to ensure that these movements are more incremental than what we observed at some times over the past months.
EU trading venues for energy derivatives will have to put such a tool in place by the end of January, under the control of national and European regulators.
“But in the interim period, we will be asking EU trading venues to set up intraday volatility tools that would broadly achieve the same result.”
