The European Commission has approved technical rules to extend the Market Correction Mechanism (MCM) - a gas price cap system on the Dutch Title Transfer Facility (TTF) gas hub - to derivatives linked to gas trading in all EU gas hubs, as of 1 May 2023 until January 2024.
The MCM was initially approved by EU energy ministers in December 2022 to protect EU households and businesses from episodes of excessively high gas prices in the EU and it entered in force on 15 February 2023. A price cap is automatically triggered if the month-ahead Title Transfer Facility (TTF) price exceeds €180/MWh for 3 working days and if the TTF price is €35 higher than a reference price for LNG on global markets for the same 3 working days. It only applied to TTF derivatives, which account for more than 90% of natural gas derivatives traded on regulated markets in the EU, but the current volatility on the EU gas markets prompted regulators to extend the measures to all EU gas hubs.