Increased financial regulation in the European Union for energy firms extensively active in energy derivatives markets?

Because of the excessive prices and volatility in the energy derivatives markets over the period 2021–2023, margins increased considerably, leading major European energy companies to experience liquidity stress in meeting those. As a consequence, several local governments needed to provide guarantees to avoid their default. This article includes several legislative proposals to ensure that energy firms are prudentially safer and that there exists a level playing field among financial actors active in the same market segment. Specifically, this article proposes to (1) decrease the clearing threshold for commodity derivatives under the European Market Infrastructure Regulation (EMIR), (2) narrow the definition of hedging relevant to the calculation of the clearing threshold, (3) remove the intragroup exemption possibility under EMIR, and (4) make sure that energy firms can be categorised more easily as investment firms. [ABSTRACT FROM AUTHOR]