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Do we have aligned and reliable gas exchange prices in Europe?

April 2016

Do we have aligned and reliable gas exchange prices in Europe?

This comment piece follows on from previous publications by Beatrice Petrovich and assesses whether the main European energy exchanges provide a reliable price reference for traded gas. Exchanges are viewed as performing a vital role in the development of a traded commodity market and provide the important functions of: price discovery, price transparency, supply/pricing flexibility, physical balancing and financial risk management. Based on this, if gas exchange trading activity exists and offers reliable price signals, we can conclude that these vital functions are provided at a satisfactory level and therefore foster the development of a mature traded commodity market. In particular, this applies to some of the nascent hubs at the European trading periphery, where well-functioning exchange trading could be instrumental in helping to develop hub liquidity by offering new products on “easy-to-trade” electronic platforms and, perhaps more importantly, price transparency.


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