The European Securities and Markets Authority (ESMA) published a report on Monday 3 July in which it considers that the management mechanisms which aim to prevent more effectively excessive fluctuations in the prices of energy derivatives, within the framework of the regulation relating to the strengthening of the coordination of gas purchases at reliable price references, have been put in place in an appropriate manner.
ESMA, whose role is to coordinate the implementation of mechanisms for managing intraday volatility on the basis of reports submitted to it by the competent authorities, points out, however, that its assessment was conducted during a period “with no evidence of episodes of prolonged volatility affecting trading in energy commodity derivatives”.
In addition, the EU’s financial markets regulator and supervisor has also analysed the functioning of intraday volatility management mechanisms in relation to the circuit breakers existing under ‘MiFID II’ (see EUROPE 13212/14). These should make it possible to temporarily suspend or limit transactions in the event of sudden and unexpected price fluctuations.
On this point, ESMA noted that there were “practical challenges” in terms of implementation, particularly in the case of illiquid trading platforms. In addition, ESMA has indicated that it will publish further guidance in the second half of 2023 to ensure the implementation and enforcement of circuit breakers. (Original version in French by Thomas Mangin)