The International Swaps and Derivatives Association (ISDA) published a white paper this week that examines the role of derivatives in energy security.
The paper – titled Energy Security and the Road to Net Zero: The Role of the Derivatives Market – was produced by ISDA’s Future Leaders in Derivatives (IFLD) offshoot, which is a professional development program for emerging leaders in the derivatives market.
The whitepaper looks at the various challenges and offers recommendations on how the derivatives market can help to protect energy security while facilitating the transition to net zero.
“I can think of no more important issue for the IFLD to address than energy security and the transition to net zero. The conflict in Ukraine and the ongoing dependence of many major economies on energy imports have contributed to an increased sense of vulnerability in this sector. Fresh perspectives are needed on how these vulnerabilities can be reduced and what role derivatives might play. I commend the IFLD for developing this timely paper, which makes a meaningful contribution to this critical issue,” Scott O’Malia, ISDA’s chief executive, said.
The 31 individuals in the IFLD represent buy- and sell-side institutions, law firms and service providers around the world. After being picked for the program, they were tasked to engage with stakeholders, develop positions and produce a whitepaper on the critical issue of energy security.
“Climate change is an enormous threat and an urgent challenge. Market volatility and energy shortages triggered by climate change require comprehensive solutions. This IFLD paper highlights the role that derivatives markets can play in safeguarding energy security and accelerating the transition to a net-zero economy. The IFLD hopes the findings of this paper will help to foster collaboration among key stakeholders, drive the development of innovative solutions and create a sustainable future,” IFLD participant Elizabeth Martinez, special counsel at Milbank, said.
Participants from the IFLD will present the paper’s recommendations at ISDA’s 37th Annual General Meeting, which takes place in Chicago this week.
“The IFLD program provides a fantastic opportunity to connect with like-minded individuals in the derivatives space, develop thought-leadership materials and receive high-quality training. The program is very well organized, while allowing participants to take full ownership of the paper. It was a pleasure to work so closely with the rest of the cohort on a topic that we are passionate about, and I would highly recommend the program to others,” IFLD participant Kate Whelan, senior associate at Allen & Overy, said.