On Wednesday 26 February, the European Commission launched a consultation on a review of the functioning of commodity derivatives markets and certain aspects relating to spot energy markets. 

The European Commission notes that the energy crisis which peaked in 2022 and the extreme volatility observed in energy markets over that period have sparked a renewed debate on the proper functioning of those markets and on the appropriateness of the applicable rulebooks. The consultation has been launched in conjunction with the European Commission's Action Plan on Affordable Energy, which it adopted on 26 February 2025. 

The consultation seeks views on issues including:

• Data aspects relating to commodity derivatives;
• The ancillary activity exemption;
• Position management and position reporting;
• Position limits;
• Circuit breakers; and
• Other elements stemming from a recent report by Mario Draghi on the future of European competitiveness, which includes recommendations linked to the functioning of energy spot and derivatives markets.

The outcome of the consultation serves several objectives:

• Feeding into the European Commission's report to the European Parliament and the Council of the EU on a comprehensive assessment of the markets for commodity derivatives, emission allowances (EUAs) or derivatives on EUAs, as mandated under Article 90(5) of MiFID II (as amended in February 2024);
• Collecting evidence to feed into broader reflections on the wholesale energy and related financial markets that may inform future policy choices in this area;
• Where appropriate, calling for legislative amendments of relevant legislation, including MiFID and REMIT; and
• Identifying targeted solutions for certain types of contracts or commodites. 

The consultation closes on 23 April 2025. 

If you have any questions regarding the consultation, please contact Aniqah Rao.