EU authorities called the gas price ceiling a risk to financial stability

The impact of the temporary ceiling on gas prices, which begins to operate in the European Union from February 15, is still difficult to assess, but this does not mean that it will not exist, such a warning is contained in the clarification of the European Securities Market Supervision Authority (ESMA). The document, the text of which is quoted by BLOOMBERG, will be publicly presented on Monday.

According to the regulator, the introduction of a price ceiling will lead to a reduction in the liquidity of trading, transactions will move into the over-the-counter market. It is assumed that the price cap mechanism will not apply to off-exchange transactions.

“The practice of price ceilings can cause serious and abrupt changes in the system of market relations, affect the functioning of markets and, in general, financial stability,” the draft document states.

In December 2022, EU energy ministers agreed to set cap prices for Russian gas. The ceiling will be set at €180 per megawatt-hour (about $2,000 per 1,000 cubic meters), the restriction will come into effect on February 15. The mandatory conditions for Europe's transition to the price cap regime are that the price of gas on the Dutch trading platform Title Transfer Facility (TTF) exceeds the level of €180 per megawatt-hour, while the price must be at least €35 higher than the cost of liquefied natural gas on the world market.

Previously, the European Commission proposed other parameters for an agreement on a price ceiling for Russian gas: a ceiling price of €275 per megawatt-hour (about $3,000 per 1,000 cubic meters). But then it was not possible to agree on a ceiling on gas prices and on the principle of pan-European fuel purchases.