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EU Price Cap Could Force ICE To Relocate Its Gas Trading Hub

Exchange operator ICE has warned it is considering relocating its gas-trading business outside the European Union if the group approves a gas price cap.

The bloc has been discussing a cap on gas prices for months now, consistently failing to agree on one because of differences of opinion ranging from strong opposition in northern Europe to strong support from southern European members.

The European Commission tabled an official proposal for capping the price of gas in November but that proposal was met with reactions ranging from ridicule to ire. Critics among EU members noted the cap was too high to be considered an effective tool for keeping prices affordable and that the other condition for the cap to enter into effect - linked to LNG spot market prices - would mean it is unlikely to ever be used.

Critics from the financial services industry, including ICE, said at the time that the cap threatens the stability of the EU financial system, a sentiment echoed by the European Central Bank, too.

Traders and fund managers also said the cap would move a lot of gas trade over the counter where there is no transparency and a lot less regulation than on exchanges such as the ones operated by ICE.

"If agreed, the market correction mechanism will be imposed on customers and the market infrastructure with no time for resilient testing and thorough risk management," ICE said this week in a statement to Reuters.

"It is the responsibility of ICE as the market operator to consider all options if this mechanism is agreed, up to and including whether an effective market in the Netherlands is still viable," the exchange operator also said.

EU energy ministers are meeting again on Monday to discuss the control of gas prices. If they manage to strike a deal, the price cap will enter into effect from January next year.

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By Irina Slav for Oilprice.com

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