The Financial Regulation of European Wholesale Energy and Environmental Markets

28 Pages Posted: 6 Mar 2011

See all articles by Ivan Diaz-Rainey

Ivan Diaz-Rainey

CEFGroup & Department of Accountancy and Finance, University of Otago

Mathias Siems

European University Institute (EUI); Durham University; European Corporate Governance Institute (ECGI)

John Kevin Ashton

Bangor Business School; University of East Anglia (UEA)

Date Written: March 5, 2011

Abstract

This study examines the financial risks posed by energy and environmental markets and how these risks are addressed by current regulatory regimes and legislation. This is undertaken using a legislative analysis of the financial regulation of energy and environmental markets, drawing on ‘grey’ literatures to appraise current policy. Initially, it is reported that the movement towards a unified European energy and environmental markets is expected to continue. Second the European Union (hereafter EU) will play an increasingly important role in the financial regulation of energy and environmental markets through bodies such as ACER and ESMA. Third, the new regulatory regime will mean more trading of energy and carbon derivatives will occur on exchanges. Fourth, where feasible there appears to be a movement towards common regulation of both spot and derivative instruments for some (e.g. within carbon and maybe electricity markets), yet not all markets. Lastly, regulation of these markets remains in a state of flux and it is essential the boundaries of regulatory responsibility between energy and financial regulators are assessed to ensure activities leading to risk do not fall between the remits of responsibility.

Keywords: Crises, Financial Regulation, Europe, Energy Markets, Carbon Finance

JEL Classification: G01, Q02, G18, G28, G38

Suggested Citation

Diaz-Rainey, Ivan and Siems, Mathias and Ashton, John Kevin, The Financial Regulation of European Wholesale Energy and Environmental Markets (March 5, 2011). USAEE Working Paper No. 11-070, Available at SSRN: https://ssrn.com/abstract=1778429 or http://dx.doi.org/10.2139/ssrn.1778429

Ivan Diaz-Rainey (Contact Author)

CEFGroup & Department of Accountancy and Finance, University of Otago ( email )

Dunedin
New Zealand

Mathias Siems

European University Institute (EUI) ( email )

Via Bolognese 156 (Villa Salviati)
Firenze, 50139
Italy

HOME PAGE: http://www.eui.eu/siems

Durham University ( email )

Stockton Road
Durham, County Durham DH1 3LE
United Kingdom

HOME PAGE: http://www.dur.ac.uk/mathias.siems

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

John Kevin Ashton

Bangor Business School ( email )

Bangor Business School
College Road
Gwynedd LL57 2DG, Wales LL57 2DG
United Kingdom

University of East Anglia (UEA) ( email )

Norwich Research Park
Norwich, Norfolk NR4 7TJ
United Kingdom

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