ESMA finds high degree of concentration in natural gas derivatives markets


The European Securities and Markets Authority (ESMA), the EU’s financial markets and securities regulator, has published a study on the structure and functioning of EU natural gas derivatives markets, and potential risks for financial stability.

In the study, ESMA reports that the annual turnover of natural gas derivatives on EU futures exchanges reached EUR 4,150bn in 2022, and open positions of EU counterparties amounted to around EUR 500bn at the end of 2022, underlining the importance of natural gas derivatives. 

The market is characterised by a high degree of concentration of market participants active in clearing and trading activity, and some energy firms hold relatively large derivative positions. In that context, liquidity and concentration risks are among the main vulnerabilities identified, along with data fragmentation and data gaps. The recent migration of some of the activity from exchange-traded to over-the counter derivatives trading raises concerns due to more limited transparency and more bespoke margin and collateral requirements in that market segment.  

Natural gas derivative markets came into the spotlight after the Russian invasion of Ukraine, as prices soared amid high volatility and a significant deterioration of liquidity. This article uses regulatory data to provide an overview of the structure and functioning of EU natural gas derivatives markets which complements other analyses published in recent months (January report | March report).


Further information:

Solveig Kleiveland

Team Leader - Communications

✆ +33 (0)1 58 36 43 27

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