By Brazil Stock Guide – During the CemigCotação de Cemig Day event, Sérgio Lopes, Vice President of Commercialization at Cemig (CMIG4), emphasized the need for new regulatory measures to ensure greater security in the energy trading market. He highlighted the importance of introducing safeguards to prevent excessive leverage by companies operating in this sector, which could otherwise lead to greater risks.
Currently, while there is a minimum capital requirement for energy trading companies to operate, no regulatory framework exists to govern the ratio between their equity and the volume of energy they can trade. According to Lopes, this lack of restriction can result in firms with, for example, R$ 40 million in capital transacting up to R$ 1 billion, which poses a significant risk to the market. “The issue is that traders do not have an leverage index. In other words, they have R$ 40 million in capital but can trade R$ 1 billion. Having a limit on this ratio would provide more security to the market,” Lopes stated, according to Valor Econômico.
Energy traders act as intermediaries in the free market, linking energy producers with consumers through bilateral contracts. In this market, prices, volumes, and terms are negotiated freely, with no centralized guarantees to ensure the fulfillment of these contracts. Lopes noted that this absence of protective mechanisms exposes the sector to increased risk, especially as the free energy market continues to expand.
A recent example of the dangers posed by such regulatory gaps was the case of Gold Energia, which engaged in speculative operations that led to an estimated loss of R$ 1 billion, with R$ 300 million impacting the regulated market. CemigCotação de Cemig (CMIG4) reported losses of R$ 28 million due to this event. According to Lopes, the collapse of Gold Energia reduced market liquidity, prompting Cemig to adopt a more conservative approach. “We are more risk-averse and are in the process of closing positions through 2028,” Lopes said.
Currently, Cemig transacts 5.5 gigawatts-medium (GWm) and has energy contracted only from 2029 onwards. To mitigate such risks, the sector is discussing the creation of a “clearing” mechanism, similar to that of the B3, to ensure the fulfillment of transactions. The BBCE (Brazilian Energy Trading Desk), in partnership with Bradesco (BBDC3), has already begun settling contracts financially, while the CCEE (Electric Energy Commercialization Chamber) is developing the Prudential Monitoring system, designed to identify risks in advance.
“The sector is seeking more governance and security,” Lopes said, emphasizing the need for stronger regulations to protect the sector’s stability and growth.
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