Margins and liquidity in European energy markets in 2022

Key takeaways

• European futures markets for natural gas and electricity were deeply disrupted by the events following the Russian invasion of Ukraine, including through large fluctuations in margins.
• The fluctuations in margins put significant liquidity demands on market participants, prompting the official sector to establish liquidity facilities in some jurisdictions.
• Fluctuations in initial margins were associated with material reductions in open interest of market participants, in line with standard deleveraging mechanisms seen in financial markets.