ESMA has released this final report on emissions allowances and associated derivatives. The report looks at the Emissions Trading Scheme (ETS) in Europe and how the process and markets in European Union Allowances (EUAs) and associated derivatives function. It includes sections on the process used, monitoring for abuse, and whether the markets function effectively, as well as the impact of the recent price changes on energy prices. While the report recommends some changes, it does not find major deficiencies.

The UK’s Department of Business, Energy and Industrial Strategy has just opened a consultation about the future of the UK ETS, which diverged from the EU ETS at the end of the transitional period. The consultation can be found here. The proposals include changes to allowance issuance, partly in conjunction with “net zero” goals, as well as the application of the scheme to aviation and shipping. On the EU side, some of these changes are part of the “Fit for 55” initiative (see here).

The changes to the position limits regimes in the EU MIFID II “Quick fix” (see here) include the introduction of more granular “position management” controls by venues. The European Commission has adopted a delegated act on the setting of “accountability levels” (see here) as well as one on changes to position reporting (see here). The revised proposed Regulatory Technical Standard relating to position limits (“RTS21a”) can be found here.