MIFID DIRECTIVE: EUROPEAN COMMISSION’S IN-DEPTH CONSULTATION ON COMMODITY DERIVATIVES, EMISSION ALLOWANCES, AND ENERGY MARKETS
Mathieu Gitton
Former Director of representative office in Brussel with expertise in corporate strategy and lobbying
In a global context marked by increased economic and climate fluctuations, the European Commission has launched an in-depth consultation open until June 9, 2025, aiming to evaluate and enhance the regulation of European financial markets. This initiative focuses particularly on commodity derivatives, emission allowances (EUAs), and various aspects of energy spot markets. The ultimate objective is to improve the efficiency, resilience, and transparency of these markets, which are crucial for economic stability and the competitiveness of the European Union.
KEY ISSUES SURROUNDING COMMODITY DERIVATIVES
Commodity derivatives are essential financial instruments used by producers, industrial consumers, energy companies, and traders to hedge against price volatility risks. By providing effective protection against unexpected market fluctuations (energy, agriculture, metals), these financial tools play a strategic role in ensuring economic stability and energy security in Europe. A well-regulated and transparent framework is essential to prevent excessive speculation and ensure genuine risk protection for economic and financial actors.
NECESSARY EVOLUTION OF THE EU REGULATORY FRAMEWORK
The consultation, conducted in collaboration with key European regulators such as ESMA (European Securities and Markets Authority), EBA (European Banking Authority), and ACER (Agency for the Cooperation of Energy Regulators), will form the basis of a comprehensive report on the current functioning of these markets. This report may lead to significant revisions of existing MiFID, REMIT, and EMIR regulations. The goal is to identify necessary legislative changes to strengthen regulatory consistency, simplify reporting obligations, enhance cross-border supervision, and anticipate future market developments effectively.
ENHANCED TRANSPARENCY, REPORTING, AND SUPERVISION
A core aspect of this consultation focuses on improving data collection, management, and transaction reporting. Currently, disparate reporting requirements under MiFID/MiFIR, EMIR, and REMIT complicate financial market supervision. The consultation explores the potential harmonization of reporting standards and the establishment of a centralized data collection mechanism, aimed at reducing administrative burdens for businesses while enhancing regulators’ ability to detect and prevent market abuses.
Additionally, the consultation will assess the feasibility of extending pre- and post-trade transparency requirementsto over-the-counter (OTC) derivative contracts, thereby improving market integrity and investor confidence.
EMISSION ALLOWANCES AND THE ENERGY TRANSITION
Since the introduction of MiFID II, emission allowances (EUAs) have been classified as financial instruments, playing a key role in Europe’s climate policy. Their increasing importance in financial markets necessitates appropriate regulation to prevent price manipulation and speculative movements that could hinder the EU’s climate objectives. The consultation seeks to review the effectiveness of existing rules governing EUA trading and derivatives, considering both their financial and environmental dimensions.
ENERGY MARKET REGULATION: THE IMPACT OF THE DRAGHI REPORT AND REMIT REFORM
The 2022 energy crisis, characterized by extreme price volatility, exposed structural weaknesses in European energy markets. In response, the REMIT reform, effective since May 2024, significantly strengthens market transparencyand regulatory oversight. Additionally, the Draghi Report, published in September 2024, underscored the need to improve European energy markets to ensure affordable energy, a critical factor for industrial competitiveness. These insights will shape the ongoing consultation, ensuring regulatory coherence and greater protection against future crises.
CONSULTATION STRUCTURE AND EXPECTED CONTRIBUTIONS
This public consultation, open to businesses, professional associations, national regulators, academics, and consumers, seeks feedback on:
The feedback received will directly shape future legislative decisions, ensuring an inclusive and balanced approach.
CONCLUSION: TOWARD A STRONGER AND MORE COMPETITIVE EU REGULATORY FRAMEWORK
The consultation, open until June 9, 2025, represents a pivotal step in strengthening European financial markets. By adapting and modernizing regulations, the EU aims to enhance economic resilience, protect market participants, and maintain its global competitiveness while effectively addressing environmental and climate challenges.
To participate or learn more, visit the official page: European Commission Consultation.
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