Supervision of energy derivatives trading is too opaque

Market participants in the trading of energy derivatives are often unaware of the exchange of their business-sensitive information by and amongst national and European national regulatory authorities, while it is essential that they can trust their data to be kept confidential. This is one of the most striking findings of Liebrich Hiemstra, who will receive her PhD at Tilburg University on Friday, Jan. 20, 2023. She makes several recommendations to improve the market supervision of energy derivatives trading.

The (cross-border) trade in energy derivatives is supervised by EU agencies ACER and ESMA in close cooperation with national regulators of EU member states. Market participants are required to disclose data on their trade in energy derivatives to the supervisory authorities, including business-sensitive information. This data exchange takes place on the basis of the Regulation on Wholesale Market Integrity and Transparency (REMIT). The regulation makes the prohibition of market abuse more concrete for the energy sector, which is essential to ensure the stable and orderly functioning of wholesale energy markets.


PhD candidate Liebrich Hiemstra of TILT (Tilburg Institute of Law, Technology, and Society) studied the nature of energy derivatives trading, what legislation applies and how supervision functions at the national and European level. Her research shows that supervisors can exchange information among themselves regarding trading in energy derivatives when market abuse is suspected, but it is not always clear what the legal basis is and what legal remedies a market participant has to do something about it.

Moreover, market participants are sometimes unaware that their information is suspected of market abuse with supervisory authorities and shared as a result. Thus, the effectiveness of the legal remedies available to market participants is questionable, Hiemstra contends.

In addition, the multiplicity of supervisory authorities does not contribute to effective supervision, as ACER does not have the authority to enforce and sanction, and other national regulators do not have the knowledge to do so given the cross-border and cross-sector nature of energy derivatives trading.


Regulators should therefore inform market participants about sharing their data with other authorities, according to Hiemstra. Such an obligation could be included in REMIT. In addition, rules of confidentiality and secrecy should be the same regardless of which national or EU regulator shares the information and the European Commission should establish binding rules for national regulators on how to cooperate and share information. Also, the National Network of Energy Ombudsmen should be opened to market participants rather than just end-users.

PhD Defense

Liebrich Hiemstra will receive her doctorate on Friday, Jan. 20, 2023, at 1:30 p.m. in the auditorium of Tilburg University. The defense can be followed via livestream. Title dissertation: Financial Supervision of Energy Derivative Trading: How do the principles of effectiveness, legality and judicial protection play out in the supervision and enforcement of information exchange in the field of energy derivative trading? A taxonomy. Supervisors: Prof. L. Hancher, Prof. S.A.C.M. Lavrijssen.

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