FAST FIVE: Goldman Explains Why "The Only Good Thing" About EU's Proposed NatGas Cap Is That It's Unlikely To Ever Be Triggered

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Further reducing liquidity in an already liquidity-poor market.

Triggering the cap would reduce the expected reliability of the price signal offered by the exchange, hence incentivizing trade flows to move away from the exchange and to over-the-counter (OTC) markets.

Disruption of commercial settlements and risk management.

A cap would potentially impact settlement prices for existing contracts and the value of existing hedges.

This can interfere with the effectiveness of risk-management policies by market participants, either by de-valuing previously layered hedges (and hence, de-valuing the companies that acted to protect themselves against higher gas/electricity prices) or by discouraging future hedges.

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