A market correction mechanism regulation as a consequence of the 2021–2023 energy crisis

This article discusses the impact of the energy crisis, as a consequence of the Russian–Ukrainian conflict, on commodity derivatives trading regulation in Europe. More specifically, as a consequence of elevated and highly volatile gas futures prices, European legislators introduced a market correction mechanism (MCM) regulation on 22 December 2022, which came into effect on 15 February 2023. This article provides a detailed discussion of the MCM regulation and puts forward possible adverse scenarios in case of government intervention. This article also discusses the daily LNG price assessments and benchmark that the Agency for the Cooperation of Energy Regulators needs to publish for the MCM to function properly.