So far, the ‘market correction mechanism’ (MCM) to cap gas prices at EU level in certain circumstances has not had a significant impact (positive or negative) on financial and energy markets, say preliminary reports published, on Monday 23 January, by the European Agency for the Cooperation of Energy Regulators (ACER) and the European Securities and Markets Authority (ESMA).
Given that the entry into force of the EU Council Regulation (2022/2578) establishing the mechanism coincides with a period when gas prices were significantly lower compared to the second half of 2022, ACER’s report states that regulators cannot comment on whether there was a direct or indirect effect between the market dynamics in the early weeks of 2023 and the adoption of the Regulation (see EUROPE 13090/29, 13087/1).
ESMA, for its part, notes that “trends already present ahead of the adoption of the Regulation continue dominating the market environment”. According to its assessment, this has not, for example, amplified the trend towards migration to over-the-counter (OTC) trading.
Nevertheless, both ACER and ESMA stress that their preliminary findings do not rule out the possibility of a significant impact of the MCM on financial and energy markets in the future.
Both organisations will publish their final reports on 1 March 2023, in accordance with Regulation 2022/2578.
To this end, ACER plans to use eleven market indicators in three areas: prices, flows and gas trade.
While ACER’s analysis focuses on energy market developments, including the evolution of liquefied natural gas (LNG) prices in EU hubs, supply and demand developments, infrastructure utilisation and bottlenecks and security of supply of gas in the EU, ESMA focuses on the impact on energy derivatives markets, including a potential shift of contracts to the OTC market.
See the ACER report: https://aeur.eu/f/510
See the ESMA report: https://aeur.eu/f/50w (Original version in French by Damien Genicot)