Enhancing energy derivatives trading: assessing the need to update the European DLT Pilot Regime Regulation.

This article focuses on the potential expansion of the European Union's Distributed Ledger Technology (DLT) Pilot Regime Regulation to include energy derivatives trading. While start-ups have increasingly applied DLT in various energy market segments, the use of DLT and smart contracts in energy derivatives remains limited despite their potential to enhance automation, efficiency, and cost reduction in complex margining and reporting processes. The current EU pilot regime permits experimentation with blockchain technology for shares, bonds, and collective investment undertakings but excludes energy derivatives, which the article argues is a missed opportunity. Including energy derivatives within the regulatory sandbox would allow market participants to test innovative trading and post-trading solutions under controlled conditions, providing valuable insights for regulators aiming to modernize financial market infrastructure in the energy sector. The article also contributes to the relatively sparse legal scholarship on the regulation of energy derivatives and the application of DLT in this domain.