ICE warns it could relocate gas trading out of EU if bloc caps price

A screen displays the ticker symbol and logo for Intercontinental Exchange Inc. (ICE) on the floor of the New York Stock Exchange
A screen displays the ticker symbol and logo for Intercontinental Exchange Inc. (ICE) on the floor of the New York Stock Exchange (NYSE) March 1, 2016. REUTERS/Brendan McDermid

BRUSSELS, Dec 15 (Reuters) - The Intercontinental Exchange has warned it will consider relocating its gas trading hub to outside of the European Union, if Brussels agrees a plan to cap gas prices.

EU energy ministers meet on Monday to attempt to approve a proposed gas price cap, after months of infighting among countries who disagree on whether the measure would help or harm their efforts to contain soaring energy prices and inflation.

"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," exchanges operator ICE said in a statement shared with Reuters.

The European Commission, which drafts EU policies, has termed the gas price cap a "market correction mechanism".

"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," ICE said.

The TTF is the most liquid gas futures market in Europe, attracting a wide range of gas suppliers, wholesalers and speculators.

Dutch gas network operator Gasunie, which set up the TTF in 2003, has said that hosting the TTF trading platform also brings benefits for Europe's fuel supply since trading activity attracts gas, boosting the stability of supply in the Netherlands.

The European Commission last month proposed a cap that would kick in if the front-month price on the TTF gas hub exceeded 275 euros per megawatt-hour for two weeks, and was 58 euros higher than a liquefied natural gas reference price for 10 days.

If approved by EU countries on Monday, the law implementing the cap would apply from Jan. 1.

EU countries are negotiating the proposal, with some countries pushing for a far lower cap level of 200 eur/MWh or below.

The European Commission did not immediately respond to a request for comment on ICE's statement.

The exchange operator warned the Commission last week that its proposal to cap gas prices could in fact drive prices higher, according to a memo seen by Reuters, if it prompted market liquidity providers to buy back short positions and stop selling TTF gas futures.

Reporting by Kate Abnett; Additional reporting by Bart Meijer in Amsterdam; Editing by Sandra Maler

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