Furthermore, the extreme volatility of prices has led to some stress in commodity derivatives markets, although there has been no major incident so far. Financial institutions have limited net exposures on commodity derivatives and banks acting as clearing members are generally safeguarded by robust credit-risk management frameworks.
Bigger net exposures are held by energy producers and suppliers, commodity traders, as well as energy-dependent firms who use commodity derivatives to hedge their core business risk. The significant drop in outstanding contracts suggests that these entities might be scaling down this hedging activity.