EU presses ahead with work on energy market, LNG benchmark

LONDON, Oct 4 (Reuters) - European Union finance ministers said on Tuesday they have backed "targeted changes" to how markets operate to ease the strain on energy companies struggling with high prices.

The bloc's securities watchdog ESMA last month recommended, on a temporary basis, introducing a new type of mechanism to halt trading in gas and energy derivatives when prices spike.

ESMA said there had been little use of "circuit breakers" in energy markets when prices rocketed following Russia's invasion of Ukraine in February.

Energy firms had difficulties finding enough cash to cover their derivatives positions, and some EU states offered liquidity to help them.

Finance ministers "can agree to targeted changes, for example by widening the pool of eligible collateral, and a better use of so-called 'circuit breakers' or 'price collars', EU states said in a statement.

The EU is looking at a new transaction-based benchmark for liquefied natural gas (LNG) because the fall in Russian pipeline gas flows and record high LNG imports have distorted the current pricing mechanism.

"Work on an additional LNG gas price benchmark to be established by the private sector ahead of the next filling season, before the end of March 2023, was also supported," the statement said.

The EU's executive European Commission said work is ongoing on the topics backed by finance ministers.

Reporting by Huw Jones

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