Wednesday, October 27

ICE Exchange Curbs UK Gas Trading Amid Wild Market Swings

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(Bloomberg) — ICE Futures Europe briefly limited trading on UK natural gas futures Wednesday, creating a circuit-breaker, as prices ballooned 39%. It’s a sign that the blistering rally is getting overheated.

If prices rise too far, too fast, ICE uses a kind of speed bump to limit trading to a certain range. Under the exchange’s Interval Price Limit mechanism, trades can continue within that range, but any bids or offers that are too high or low won’t go through.

The circuit-breakers lasted for 15 seconds this morning in London, according to ICE Futures Europe.

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While gas prices have since erased the morning surge, futures are still up 68% since the beginning of last week as a global race for fuel supplies intensifies and winter heating demand starts to rise.

The impact is being felt across the economy with expectations for higher inflation and industry warning of widespread shutdowns. Energy trading companies may start to feel the squeeze too as margin requirements increase on exchanges.

“I think it’s panic,” said Tom Roberts, chief executive office of Arraco Global Markets Ltd. “Credit is tight and fewer people are trading, so markets are choppy and wide.”

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