SHEL - Euro energy traders ask for liquidity from governments to buffer margin call

In a letter dated March 8, the European Federation of Energy Traders requested liquidity support from governments to "buffer the impact of clearing houses margin calls." The letter included an example, "an energy producer who hedges large volumes of gas and power via exchanges had to pay an initial margin of EUR 1b in summer 2021, had seen its margin requirements increase to EUR 4bn by October 2021 and ultimately to EUR 6bn in March 2022." The example of a prudent energy producer, locking in future prices through derivatives, could garner public support for the Federation's request; however, following the end of Equinor's (NYSE:EQNR) gas hedging program several years ago, none of the major energy producers in Europe hedge upstream production. A parallel crisis on the London Metals Exchange points to relatively imprudent use of derivatives by market participants, the sort of imprudence that is unlikely to garner public support. The

For further details see:

Euro energy traders ask for liquidity from governments to "buffer" margin call