Targeted regulatory changes to commodity derivative markets will improve oversight, increase market participation, and support affordable, stable energy across Europe
Brussels, Belgium – MFA encouraged the European Commission to implement targeted reforms to its EU energy market regulations in a comment letter submitted yesterday. The letter responds to the Commission’s review of the functioning of commodity derivative markets and spot energy markets.
“Robust and competitive energy markets are essential to Europe’s energy security, economic growth, and long-term stability,” said Jillien Flores, MFA Chief Advocacy Officer. “The reforms MFA recommends will improve transparency, reduce barriers to entry, and preserve access to deep, liquid markets. These changes will ensure appropriate oversight, and contribute to more stable, affordable energy for European businesses and households.”
MFA’s recommendations will improve EU energy markets by increasing market participation, enhancing market supervision, and supporting better price formation. Streamlining transaction reporting and preserving access for global participants will reduce costs, ensure deeper and more liquid markets, and help deliver more affordable energy for European businesses and households.
MFA’s five primary recommendations are to:
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Harmonize EU energy market reporting regimes – The current transaction reporting framework includes the Regulation on Wholesale Energy Market Integrity and Transparency (REMIT), the Markets in Financial Instruments Directive (MiFID), the Markets in Financial Instruments Regulation (MiFIR), and the European Market Infrastructure Regulation (EMIR). This fragmented framework is overly burdensome and hampers the efficient functioning of EU energy markets. A single, centralized system using a common dataset and existing trade repositories will reduce duplication, lower operational costs, and improve data quality for regulators.
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Avoid unnecessary and burdensome reporting requirements – Proposals to require firms to proactively submit sensitive position data with trading venues will raise legal and compliance risks, increase costs, and offer limited supervisory benefits. Regulatory reporting should remain targeted, proportionate, and risk-based.
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Reject location-based restrictions on derivatives trading – Proposals to limit energy derivatives trading to EU-based firms will reduce the number of market participants, harm liquidity, and weaken price discovery. Maintaining open access to EU markets will support energy market stability and fair pricing for consumers across Europe.
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Improve transparency around circuit breakers – MFA supports more predictable and transparent use of circuit breakers by trading venues. Greater clarity on when and how trading halts are triggered will help market participants manage risk during periods of volatility.
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Ensure proportional treatment of spot energy markets – MFA cautioned against applying MiFID-style governance and compliance requirements—designed for financial institutions—to commercial energy firms active in spot markets. Imposing these rules could raise costs, reduce participation, and fragment EU energy markets.
Read the full letter here.
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About the global alternative asset management industry
The global alternative asset management industry — including hedge funds, private credit funds, and hybrid funds — serves thousands of public and private pension funds, charitable endowments, foundations, and other global institutional investors. The industry provides portfolio diversification and risk-adjusted returns to help meet their funding obligations and return targets throughout the economic cycle.
About MFA
Managed Funds Association (MFA), based in Washington, D.C., New York City, Brussels, and London, represents the global alternative asset management industry. MFA’s mission is to advance the ability of alternative asset managers to raise capital, invest it, and generate returns for their beneficiaries. MFA advocates on behalf of its membership and convenes stakeholders to address global regulatory, operational, and business issues. MFA has more than 180 fund manager members, including traditional hedge funds, private credit funds, and hybrid funds, that employ a diverse set of investment strategies. Member firms help pension plans, university endowments, charitable foundations, and other institutional investors diversify their investments, manage risk, and generate attractive returns throughout the economic cycle.
