Copyright 2013 EFETnet BV. EFETnet Update. EFETnet B.V. Keizersgracht CS Amsterdam. Phone: 0031(0) Fax: 0031(0)

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1 EFETnet Update EFETnet B.V. Keizersgracht CS Amsterdam Phone: 0031(0) Fax: 0031(0)

2 Who are EFETnet The EFETnet Central Matching Service Agenda electronic Confirmation Matching exchange Related Processes electronic Regulatory reporting Next Steps 2

3 WHO ARE EFETNET? 3

4 EFET BP and IT Mission Mitigate the impact of market change on operations and IT Mandatory Clearing (DF, EMIR) Mandatory Reporting (DF, EMIR, REMIT) EFET BPOC: creation of industry standard interfaces ecm: exrp: err: European standard for confirmation matching Universal interface to clearing and CCP reconciliation Universal interface to regulatory reporting Promote choice and completion at a time of market change. 4

5 EFETnet: Implementing EFET Standards EFETnet is an energy industry owned, not for profit, cost sharing vehicle, providing non-discriminatory, open standard, market infrastructure services for all market participants EFETnet takes EFET standards and implements these as solutions THE provider of European post trade processing in energy Comprehensive range of post trade processes Confirmation Matching (including oil, metals, ags etc..) Position Matching Settlement Matching (Invoices) OTC Clearing Registration European Regulatory Reporting Communications standardisation 5

6 EFETnet open industry standardised data exchange and services P2P Traders P2P Traders Regulators/ Trade Reps Trader 1 P2P Traders P2P P2P Traders Legacy Matching Broker 1 ecm exrp err Broker 2 Trader 2 Trader 3 P2P Traders P2P Traders Exchanges CCPs EFETnet: the universal interface at the heart of the market

7 EFET and EFETnet Evolving 7

8 THE EFETNET CENTRAL MATCHING SERVICE 8

9 The EFETnet Central Matching Service The Central Matching Service (CMS) is a central platform and service team which EFET standards and processes can be plugged into The service launched with the EFET electronic Confirmation Matching standard in September 2011 Through delivery of ecm, the CMS currently processes more than half of all OTC power and gas trades in Europe The CMS manages all communication configuration (trading counterparties, exchanges, reporting points, etc.) and centrally hosts the solution, enabling licensed users to implement EFET compliant solutions and deliver benefit very quickly The CMS is hosted by a top tier hosting partner, recommended by the UK Ministry of Defence for the level of security they deliver The CMS now supports three processes, ecm, exrp and err 9

10 Data Interface Routing Rules Data Interface EFETnet CMS High Level Architecture Traders Brokers EFETnet Central Matching Service CMS Dashboard electronic Confirmation Matching Match Near Match Clearing Agent exchange Related Processes Register Reconcile Valuation/ Span Calc. electronic Regulatory Reporting Transform & Enrich Audit Unique Trade Identification Data 10 Regulatory Repositories

11 The Evolution of the CMS What Launch Today Processes One ecm Three ecm, exrp, err Organisation groups Matching entities ecm matches per entity per month Average trader matches per month exrp transactions per entity, per quarter Messages handled per hour Trader: 4.9K Broker: 15.5K First year: 148K Trader: 3.8K Broker: 17.7K Most recent 12 months: 167K (from small acorns ) 6K 7.7K

12 CMS User Growth Organisation Groups 35 MVV OMICLEAR E.oN Endesa NATGAS Wingas BoA/ML BarCap Citibank DB EdFT GdfSuez J Aron JPMC Mercuria MS RWE Shell GFI ICAP MarexSpectron TFS Tullett Prebon Gunvor Phillips 66 Dong Eneco CS APX/Endex EEX Giffin ENI Glencore OTCEX Exchanges Brokers Traders

13 The EFETnet Central Matching Service Provided through a Software as a Service model Multi-organisation, multi-role, multi-user solution Highly available solution Simple implementation path with very small local IT footprint

14 EFETnet CMS Software as a Service Delivery Model All hardware included All software included:- EFETnet, OS, application servers database servers, etc. All Infrastructure included:- networks, DB administration, DR, back up, archiving, monitoring Simple and fast counterparty take on Centralised and managed upgrades to new versions of the standard:- migration, testing, c/p testing Analysis and resolution of all communication issues Full support for the latest EFET standards Dedicated, full time, service team based in UK and Germany

15 The CMS Service Team Dedicated service team providing both business and technical support One support team for all EFETnet software CMS and peer to peer 24x7 availability * 24x7 support * Proactive monitoring of issues across all connection points CMS and peer to peer Analysis and resolution of all peer to peer communication synchronisation issues Helpdesk reporting and training * Excluding notified maintenance windows

16 ELECTRONIC CONFIRMATION MATCHING 16

17 Simplifying and Standardising Trade Confirmations electronic Confirmation Matching (ecm) is the longest established EFET standard EFETnet ecm solution has been in the market for 8 years The de facto European energy industry solution for automating trade confirmations Initially a locally installed and managed peer to peer (P2P) solution, version 4.0 of the EFET ecm standard defined a centralised model In September 2011, EFETnet launch the ecm as the first EFET process on the Central Matching Service 17

18 The Central Matching Service Architecture CMS as proxy CMS CMS Users user CMS as proxy P2P user Peer to Peer Users Trader A ETRM CNF A Res CNF B a Res Central Matching Service CNF A CNF X Trader X ecm CNF X Res CNF Y x Res Trader X ETRM Trader B ETRM CNF B b Res CNF Y x Trader Y ecm CNF Y y CNF Y y Res Trader Y ETRM

19 Benefits of ecm Faster process Lower manual intervention, so lower risk of error Detailed, secure audit trail Immediate connection to over 60 market participants, both traders and brokers 19

20 ELECTRONIC REGULATORY REPORTING 20

21 How regulation appears to compliancy experts European Financial Legislation MAR Insider Trading Market Manipulation MIFID/CRD Banking License Regulatory Capital Requirements EMIR (OTC Derivatives) Mandatory Clearing Short Selling Regulation Short Selling Prohibition Authorities Coordination Harmonisation ESMA ACER Guidelines Energy Trading Company Guidelines Fin. NRAs Ener. NRAs Antitrust authorities National Supervision Enforcement, Sanctioning European Energy Legislation Third Package Fundamental Data Transparency/Record keeping REMIT Sector-specific Market Integrity and Transparency Regime REMIT Registration Regime 21

22 How regulation appears to operational and IT experts Commodity Trading Company Commodity Broker Energy Commodity Trading Clearing Company Exchange Broker House Commodity Exchange Commodity Clearing House 22

23 The purpose of err Commodity Trading Company Commodity Broker Single Reporting err Standard Single Reporting Single Reporting Commodity Exchange Single Reporting Commodity Clearing House 23

24 How to achieve a single industry solution to a common industry issue Traders Operational Brokers Requirements Exchanges CCPs err Pilot Project ACER/ NRA CpML Data CIO Forum Requirements Vendors (Trayport etc.) err Standard EFET err Standard Internal err Implementation (In house) External err Implementation (EFETnet) Industry Standard Solution 24

25 Current Product - Scope Commodities Coal (Financial & Physical EU/US) Gas_Oil (Financial & Physical EU/US) Nat_Gas (Financial & Physical EU/US) Oil (Financial & Physical EU/US) Emissions (Financial & Physical EU) Metals/Bullion (Financial & Physical) Benzene Diesel_Fuel Electricity Fuel_Oil Gasoline Heating_Oil Jet_Fuel Methanol Naphtha NGL Wet_Freight Dry_Freight Time_Charter Ags Volatility Non-Commodities IRS FX OTC Products Physical Forward Option on a physical forward Physical index Option on a physical index Fixed/float swap Fix/Fix swap (IRS) Basis swap (IRS) XCCY swap (IRS) Float/float swap Fixed/float swaption Float/float swaption Option on an index (Financial Options) Variance Swaps Strategy Deals Non-Standard Products NOT Capacity trades Cleared Products Futures Options

26 err Scope of Solution Route Route deal data to SDR/TR/NRA based on standard criteria (filtering rules) Transform & Enrich Apply CpML to Target TR format & coding schemes Unique ID Create UTI etc.. Audit Trail Dashboard Notifications Standardised error codes Valuation & Position Valuations using standard curves Position Matching for OTC positions 26

27 Current Status In 2011, EFETnet won a joint bid with the DTCC for ISDA s global commodities trade data repository EFETnet has developed universal reporting services err to support the delivery of the ISDA requirement First phase went live in March 2012 ODRF reporting for oil swaps Full Dodd-Frank reporting for Commodities has been live since February 2013 Currently working with 11 traders, 6 brokers and 3 exchanges to extend the solution to Europe Support for EMIT and REMIT reporting alongside Dodd-Frank 27

28 Data Interface Routing Rules Data Interface EFETnet electronic Regulatory Reporting High Level Architecture Traders Brokers EFETnet Central Matching Service err Dashboard Transform & Enrich Valuations Unique Trade Identification Audit Trail Position Reconciliation Data Regulatory Repositories 28

29 Timeline Start Now Publish EFET err Standard EFETnet err Service Live err Prototype Productise err exrp Complete March 2013 May 2013 August 2013 EMIR Clearing Obligation January 2014 EMIR and REMIT Reporting Obligations 29

30 EXCHANGE RELATED PROCESSES 30

31 exrp Overview 31

32 OTC clearing before exrp 32

33 OTC Clearing with exrp 33

34 Trader benefits Phase 1 OTC Clearing Registration Single consolidated view of all OTC cleared deals Monitor clearing registration in real time Automate clearing and take-up of off-exchange deals Alerts for issues with clearing ( ) See error codes and monitor remedial action by Broker/Clearer Source of OTC Clearing data for regulatory reporting (err) Phase 2 CCP Reconciliation Reconcile transaction and settlement data with Central Clearing Parties and General Clearing Members 34

35 Current exrp Participants Brokers Clearing Registration Agents

36 Timeline Start Now Publish EFET err Standard EFETnet err Service Live err Prototype Productise err exrp Complete March 2013 May 2013 August 2013 EMIR Clearing Obligation January 2014 EMIR and REMIT Reporting Obligations 36

37 AOB AND QUESTIONS 37

38 For more information contact EFETnet B.V. Keizersgracht CS Amsterdam Tel: +31 (0) or +44 (0)