(Bloomberg) -- Europe’s top markets watchdog proposed measures to ease the stress of margin calls in energy markets, paving the way for uncollateralized bank guarantees to be used as collateral. 

The European Securities and Markets Authority said it will temporarily allow letters of credit for energy traders with physical exposure for a period of 12 months. It also said it would allow guarantees from governments and development banks for all types of counterparties, including those without physical exposure. 

Curbs to Russian gas flows toward Europe have sent energy prices into a period of unprecedented volatility, at times inducing massive margin calls that sucked up cash and crushed trading volumes. 

Norwegian oil and gas giant Equinor ASA said earlier this year that margin calls of at least $1.5 trillion were straining the industry. That has led to efforts by regulators to ease the cash burden of trading. 

“ESMA will continue to work on other potential measures to respond to the extreme volatility in energy markets,” it said in a statement. 

The body’s recommendations have been sent to the European Commission for endorsement and will then be subject to a scrutiny procedure by the European Parliament and European Council, it said. 

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