NORD POOL CLEARING ASA

Transcription

1 CLEARING RULES FOR FINANCIAL ELECTRICITY CONTRACTS NORD POOL CLEARING ASA

2 Clearing Rules -Table of Contents: I. CLEARING TERMS 1. INTRODUCTION THE CLEARING RULES GENERAL INTERPRETATION RULES DEFINITIONS AND ABBREVIATIONS CLEARING MEMBERSHIP REQUIREMENTS CLEARING CLIENT REQUIREMENTS ESTABLISHMENT OF ACCOUNTS CLEARING PROCEDURES REGISTRATION AND ACCOUNT INFORMATION COLLATERAL RULES SETTLEMENTS AND SETTLEMENT PROCEEDINGS DEFAULT AND DEFAULT PROCEDURES LIABILITIES AND FORCE MAJEURE COMMUNICATION II. CLEARING AGREEMENTS: A. Clearing Membership Agreement B. Clearing Client Agreement C. Pledged Cash Account Agreement (NOK) D. Non-Pledged Cash Account Agreement (NOK) E. Nord Pool Clearing Bank Guarantee F. Broker Agreement G. Settlement Bank Agreement (Euro) H. Pledged Cash Account Agreement (Euro) I. Non-Pledged Cash Account (Euro) J. Settlement Bank Agreement (NOK) K. Sub-Representative Agreement III. CLEARING APPENDICES: 1. CDA User Terms 2. Product Specifications for Cleared Products (Listed and Non-Listed Products) 3. Clearing Schedule 4. List of Settlement Banks 5. Nord Pool Clearing fee list Ver Dec

3 including the Joint Appendices 6. Market Conduct Rules 7. Ethical Guidelines 1. INTRODUCTION 1.1 Nord Pool Clearing is a Norwegian public limited company wholly owned by Nord Pool. Nord Pool Clearing is authorised by the Norwegian Ministry of Finance as a clearing house under the Securities Trading Act 1997, and is supervised by BISC. 1.2 Nord Pool Clearing provides Clearing for Exchange Trades and Non-Exchange Trades in Financial Electricity Contracts as further regulated by these Clearing Rules. 1.3 Clearing Members meeting the requirements in Chapter 5 may have their Exchange Trades and Non-Exchange Trades cleared with Nord Pool Clearing. 1.4 Clearing Clients meeting the requirements in Chapter 6 may, when represented by a Clearing Member meeting the requirements in Chapter 5, have their Exchange Trades and Non-Exchange Trades cleared with Nord Pool Clearing. 1.5 Further conditions for Clearing are set out in Chapter 7, while the procedures for Clearing are set out in Chapter All Trades subject to Clearing with Nord Pool Clearing shall be registered on Clearing Accounts pursuant to Chapter Account Holders are subject to the Collateral Calls in Chapter Clearing entails that Nord Pool Clearing enters into a Trade as a party, becoming a central counterparty with both the Buyer and the Seller. As a central counterparty, Nord Pool Clearing shall effect Settlements vis-à-vis the Account Holders pursuant to Chapter Nord Pool Clearing may take any action in case of Default Event as provided for in Chapter A Clearing Member and Clearing Client shall pay Nord Pool Clearing the fees specified in the Nord Pool Clearing fee list All Exchange Trades matched at Nord Pool are automatically subject to Clearing with Nord Pool Clearing, without any approval procedure in respect of Nord Pool Clearing Non-Exchange Trades carried out by Clearing Members or Clearing Clients will be subject to Clearing with Nord Pool Clearing based on Clearing Request from the parties involved and are subject to approval from Nord Pool Clearing. 2. THE CLEARING RULES Ver Dec

4 2.1 The Clearing Rules are a set of private law agreements applying to Nord Pool Clearing, Clearing Members and Clearing Clients in respect of Clearing and related activities. 2.2 The Clearing Rules consist of the Clearing Terms in this document and also include the following Clearing Agreements when applicable to the relevant Clearing Member or Clearing Client: A. Clearing Membership Agreement, which is a sign-on agreement entered into between the Clearing Member and Nord Pool Clearing. B. Clearing Client Agreement, which is a sign-on agreement entered into between the Clearing Member, the Clearing Client and Nord Pool Clearing. C/D. Pledged Cash Account Agreement (NOK) and Non-Pledged Cash Account Agreement (NOK), which Account Holders may choose between. E. Nord Pool Clearing Bank Guarantee, a standard form of bank guarantee accepted as Collateral when issued by a financial institution approved by Nord Pool Clearing. F. Broker Agreement, which Brokers wishing to process Clearing Request to Nord Pool Clearing must sign. H/I. Pledged Cash Account Agreement (Euro) and Non-Pledged Cash Account Agreement (Euro), which Account Holders may choose between. K. Sub-Representative Agreement, which is a sign-on agreement entered into between the Clearing Member/Clearing Client, Client Representative and Nord Pool Clearing. 2.3 The Clearing Rules also include the following Clearing Appendices when applicable to the relevant Clearing Member or Clearing Client: 1. CDA User Terms. 2. Product Specification for Cleared Products (Listed Products and Non-Listed Products). 3. Clearing Schedule. 4. List of Settlement Banks. 5. Nord Pool Clearing fee list. 2.4 The Clearing Rules also include the following Joint Appendices: 1. Market Conduct Rules, containing rules applicable to Clearing Members and Clearing Clients when Trading in Listed Products, under surveillance and sanctioned by Nord Pool as further provided for in the Market Conduct Rules. Ver Dec

5 2. Ethical Guidelines with non-sanctioned ethical guidelines for Trading in Listed Products. 2.5 The Clearing Membership Agreement and Clearing Client Agreement respectively contain procedures for amendments to the Clearing Rules. In addition the following rules apply: Plans for changes or amendments to the main principles of the Clearing Terms shall with 1 month notice be presented by to the Market Council for consultation. Consultations may be waived if the changes are required by law or by Regulatory Bodies or in special circumstances when of material importance Changes to the Ethical Guidelines require the consent of the Market Council. 3. GENERAL INTERPRETATION RULES 3.1 In the Clearing Rules references to an entity include a body corporate, an unincorporated association of persons or any other legal entity or physical person. References to an Exchange Member or Clearing Member or Clearing Client include references to the successors or assigns (immediate or otherwise) of that party. 3.2 References to points in time refer to Central European Time. 3.3 Any words importing the singular shall admit the plural where the context admits and vice versa. Any words importing the neutral gender shall include the feminine gender and the masculine gender (in respect of a physical person). 3.4 Included or including shall, when applied in the Clearing Rules, mean "included without limitation" or "including without limitation". 3.5 The headings in the Clearing Rules do not affect its interpretation. 4. DEFINITIONS AND ABBREVIATIONS The following definitions and abbreviations are used in these Clearing Rules. The definitions and abbreviations may also include references to terms defined in the Trading Rules. Account Holder Agreed Price Clearing Member or Clearing Client holding a Clearing Account with Nord Pool Clearing and a Pledged Cash Account or Non-Pledged Cash Account. Futures Price, Forward Price, CfD Price and Option Premium respectively. Automatic Exercise BISC Exercise of Option Contract by Nord Pool Clearing on behalf of an Option Holder on the Expiry Day, as further regulated in the Clearing Rules Section The Norwegian Banking, Insurance and Securities Commission, organised in accordance with the Norwegian Act on Banking, Insurance and Investment Firm Ver Dec

6 Supervision of Broker Broker Agreement Buyer Call Option Cash Settlement Call Option Cash Account Cash Collateral Cash Margin CDA An entity registering Clearing Requests with Nord Pool Clearing on behalf of Clearing Members or Clearing Clients without being their Client Representative. Agreement between Nord Pool Clearing and Broker. Futures Buyer, Forward Buyer, CfD Buyer or Option Holder. An Option Cash Settlement where the Option Holder shall receive and the Option Writer upon exercise shall pay the difference between the Option Fixing Price and the Option Exercise Price. Option Contract entitling the Option Holder, upon Option Exercise, to receive a Call Option Cash Settlement and/or to be registered as Buyer of the Underlying Contract while the Option Writer shall pay the Call Option Cash Settlement and/or be registered as Seller of the Underlying Contract, all as specified in the Product Specification. A bank account opened by an Account Holder with a Settlement Bank, in the form of a Pledged Cash Account or Non-Pledged Cash Account. Collateral in the form of cash deposits to the Pledged Cash Account. Proportion of Daily Margin Call, which must be covered by cash deposit to a Pledged Cash Account or Non-Pledged Cash Account to assure Daily Market Settlement. Clearing Desk Application; Nord Pool Clearing`s electronic system for communication with Clearing Members and Brokers in respect of Clearing. CDA User Terms CfD Buyer CfD Price CfD Seller Appendix to the Clearing Rules regulating use of CDA. Party to a CfD Contract that in Expiry Market Settlement is entitled to any positive difference between Final Closing Price and CfD price and in Spot Reference Cash Settlement entitled to the positive difference between Spot Reference Price and Final Closing Price, while under an obligation to pay the CfD Seller any negative differences. The price agreed between CfD Buyer and CfD Seller when entering into a CfD Contract. Party to a CfD Contract that in Expiry Market Settlement is entitled to any positive difference between CfD price and Final Closing Price, and in Spot Reference Cash Settlement Ver Dec

7 to the positive difference between Final Closing Price and Spot Reference Price, while under an obligation to pay the CfD Buyer any negative differences. Cleared Products Clearing Clearing Account Clearing Agreements Clearing Appendices Clearing Client Clearing Client Agreement Clearing Confirmation Clearing Day Clearing Hours Clearing Member Clearing Member Agreement Listed Products, and Non-listed Products for whichnord Pool Clearing has issued Product Specifications for Non- Listed Products. A clearing-by-novation process where Nord Pool Clearing enters into the Trade as central counterparty vis-à-vis the initial Buyer and Seller. A Clearing Member or Clearing Client s account with Nord Pool Clearing for registration of Trades subject to Clearing, including Intra Day Accounts, Non-Allocated Sale Accounts and Non-Allocated Buy Accounts. The agreements specified as such in the Table of Contents of these Clearing Rules. The documents specified as such in the Table of Contents of these Clearing Rules. An entity that has been approved by Nord Pool Clearing to have its Trades subject to Clearing through a Client Representative. A sign-on agreement between a Clearing Member, Clearing Client and Nord Pool Clearing, providing the Clearing Client access to Clearing when meeting the requirements in the Clearing Rules. A confirmation to the Clearing Members involved that Nord Pool Clearing will provide Clearing of a Trade. Day when Settlement is conducted by Nord Pool Clearing, as specified in the Clearing Schedule. Time interval during a Clearing Day when Clearing Requests are received and processed by Nord Pool Clearing, as specified in the Clearing Schedule. An entity that has been approved by Nord Pool Clearing to have its Trades subject to Clearing with Nord Pool Clearing when meeting the requirements in the Clearing Rules. A sign-on agreement between a Clearing Member and Nord Pool Clearing providing access to Clearing with Nord Pool Clearing when meeting the requirements in the Clearing Rules. Clearing Request A request for Clearing of a Non-Exchange Trade filed with Nord Pool Clearing by a Clearing Member or Broker or Ver Dec

8 Associated Market Place. Clearing Request Confirmation Clearing Rules Clearing Schedule Clearing Terms Client Representative Client Trade Close-Out Buy Close-Out Sale Close-Out Settlement Close-Out Trade Collateral Collateral Calls Contract Contract for Difference or CfD Contract Volume A confirmation of a Clearing Request, filed with Nord Pool Clearing by a Clearing Member. A set of agreements consisting of the Clearing Terms and applicable Clearing Agreements and Clearing Appendices as described in Chapter 2. Appendix to the Clearing Rules, specifying Clearing Days and Clearing Hours and relevant time limits for the Clearing procedures. This document, constituting a part of the Clearing Rules. A Clearing Member who represents Clearing Clients in relation to Clearing with Nord Pool Clearing (including Sub-Representatives and Primary Representatives). A Trade that a Client Representative registers for Clearing for the account and risk of a Clearing Client. A Close-Out Trade where a bought Contract is off-set against a previously sold Contract. A Close-Out Trade where a sold Contract is off-set against a previously bought Contract. Settlement following a Close-Out Trade. Trade which is automatically set-off against an Opposite Position (contract netting) by registration in the same Clearing Account. Cash deposits in a Pledged Cash Account or Nord Pool Clearing Bank Guarantees, or other forms of collateral approved by Nord Pool Clearing as provided by a Clearing Member or Clearing Client. Nord Pool Clearing's calls for Collateral from a Clearing Member or Clearing Client, consisting of Initial Margin Calls, Daily Margin Calls and Extraordinary Margin Calls. Financial Electricity Contract. Contract where the underlying Spot Reference Price is the difference between two different Spot Reference Prices, as further defined in the Product Specification. The electric power volume a single Contract refers to and which the Spot Reference Price is quoted for, as specified in the Product Specification in MWh for each hour of the Delivery Period. Ver Dec

9 Credit Support Provider Daily Cash Settlement Daily Cash Settlement Amount Daily Closing Price Daily Margin Call Daily Market Settlement Default Event Delivery Hours Delivery Period Enforcement Act Ethical Guidelines ETS Euro Euro Products Settlement Bank or financial institution issuing Nord Pool Clearing Bank Guarantee. Cash Settlement between Nord Pool Clearing and Account Holders, effected on the Cash Accounts each Clearing Day at the Settlement Time, for the Daily Cash Settlement Amount. Aggregated net cash amount owing to Nord Pool Clearing from or payable by Nord Pool Clearing to an Account Holder, as calculated for each Pledged Cash Account or Non-Pledged Cash Account. Price for each Listed Products Series as calculated by Nord Pool every Trading Day, distributed by Nord Pool and applied by Nord Pool Clearing for Collateral Calls and Settlement. Nord Pool Clearing s call for Collateral from an Account Holder to cover risks in Open Positions and Pending Settlements, calculated daily for each Clearing Account. Mark-to-market cash settlement for Futures Contracts. An event involving Nord Pool Clearing or a Clearing Member or Clearing Client as further defined in Section , which triggers the possible actions specified in Chapter 12. The number of hours in the Delivery Period that a single Contract refers to and which the Spot Reference Price is quoted for. A time period following Expiry of a Futures Series, Forward Series or CfD Series as further specified in the Product Specification, when a Spot Reference Cash Settlement and Expiry Market Settlement shall be conducted. The Norwegian Act on enforcement of debts of 26 June 1992 No 86. Appendix to the Trading Rules and Clearing Rules, containing non-sanctioned ethical guidelines for Trading in Contracts and electric power. Nord Pool s system for electronic Exchange Trading. The lawful currency in member states of the European Union that adopt the single currency in accordance with the Treaty establishing the European Communities as amended by the Treaty on European Union. Listed Products and Cleared Products where Euro is designated in the Product Specification as the applicable Ver Dec

10 currency. Euro Cash Account Exchange Member Exchange Trade Exchange Trading Expiry Expiry Date Expiry Market Settlement Extraordinary Margin Call Final Allocation Time Final Clearing Complaint Time Final Closing Price Final Collateral Time Final Correction Time Final Exercise Time Final Trade Confirmation Time Cash Account denominated in Euro. Entity having entered into an Exchange Membership Agreement with Nord Pool for Principal Trading and/or Client Trading. A Contract in a Listed Product that is entered into as a result of Exchange Trading. Trading carried out by an Exchange Member through a Trading System. The termination of a Financial Electricity Contract, triggering the Settlements and possible Option Exercises as further provided for in the Clearing Rules. Day when a Product Series is subject to Expiry as set out in the Product Specification for the series. An accumulated market settlement fixed at Expiry Date to be paid in instalments in the Delivery Period. Nord Pool Clearing s call for an extraordinary Collateral deposit from an Account Holder to cover risks in Open Positions and Pending Settlements. Time specified in the Clearing Schedule when all Trades in an Intra Day Account must be allocated to another Clearing Account. Time specified in the Clearing Schedule when a complaint must be filed with Nord Pool Clearing. A volume-weighted average of the Exchange Trading price in a Product Series on Expiry Day or another price set by Nord Pool Clearing, used for Settlement purposes. Time specified in the Clearing Schedule when Collateral at latest shall be provided for the Daily Margin Call. Time specified in the Trading Schedule and Clearing Schedule when corrections of Trade errors at latest must be effected by Nord Pool, upon which the registration of Trades with Nord Pool Clearing becomes final. Time on Expiry Day as specified in the Clearing Schedule, when a Manual Exercise or reservation on Automatic Exercise must be registered with Nord Pool Clearing at latest. Time specified in the Trading Schedule when Trade Confirmation at latest shall be forwarded to the Exchange Member. Ver Dec

11 Financial Electricity Contract Forward Buyer Forward Contract Forward Price Forward Seller Forward Series Futures Buyer Futures Contract Futures Price Futures Seller Futures Contract, Forward Contract, Option Contract or CfD related to prices quoted for electric power. Party to a Forward Contract that in Expiry Market Settlement is entitled to any positive difference between Final Closing Price and Agreed Price and in Spot Reference Cash Settlement any positive difference between Spot Reference Price and Final Closing Price, while under an obligation to pay the Forward Seller any negative differences. Contract between Forward Buyer and Forward Seller establishing rights and obligations to Expiry Market Settlement and Spot Reference Cash Settlement reflecting price variations for the Contract Volume of electric power. The price agreed between Forward Buyer and Forward Seller when entering into a Forward Contract. Party to a Forward Contract that in Expiry Market Settlement is entitled to any positive difference between Agreed Price and Final Closing Price and in Spot Reference Cash Settlement is entitled to any positive difference between Final Closing Price and Spot Reference Price, while under an obligation to pay the Forward Buyer any negative differences. All Forward Contracts with the same contractual terms as specified in the Product Specification, except for the Forward Price. Party to a Futures Contract that in Daily Market Settlement is entitled to cash compensation corresponding to a rise in market price for the Series and in Spot Reference Cash Settlement for any positive difference between Spot Reference Price and Final Closing Price, while under an obligation to pay the Futures Seller any negative differences. Contract between Futures Buyer and Futures Seller, to Daily Cash Settlement and Spot Reference Cash Settlement reflecting price variations for the Contract Volume of electric power. The price agreed between Futures Buyer and Futures Seller when entering into a Futures Contract. Party to a Futures Contract that in Daily Market Settlement is entitled to cash compensation corresponding to a fall in market price for the Futures Series and in Spot Reference Cash Settlement for any positive difference between Final Closing Price and Spot Reference Price, while under an obligation to pay the Futures Buyer any negative Ver Dec

12 differences. Futures Series Hedge Trading Initial Margin Call Insolvency Event Intra Day Account All Futures Contracts with the same contractual terms as specified in the Product Specification, except for the Futures Price. Trade carried out by Nord Pool Clearing or by a Client Representative with the consent of Nord Pool Clearing, for the account and risk of an Account Holder involved in a Default Event, in order to reduce the market risk of Open Positions. Nord Pool Clearing s initial call for Collateral from a Clearing Member and Clearing Client, to be posted before Clearing may commence. An event involving a Clearing Member or Clearing Client as defined in the Clearing Rules Section A Client Representative s special Clearing Account for interim registration of Client Trading and Principal Trading. Listed Products List of Settlement Banks Manual Exercise Material Default Event Market Conduct Rules Market Council Ministry of Finance MTS NOK Account NOK Products Nord Pool Clearing Product Series admitted by Nord Pool for Exchange Trading, as further specified in Product Specifications for Listed Products. Appendix to the Clearing Rules identifying Settlement Banks approved by Nord Pool Clearing. Option Exercise request registered by Option Holder. A Default Event involving Nord Pool Clearing or a Clearing Member or Clearing Client as further defined in Section , which triggers the actions specified in Chapter 12. Joint Appendix to the Trading Rules and Clearing Rules, with rules on market conduct for Market Participants. An independent advisory council to Nord Pool, appointed under the articles of association of Nord Pool. The Norwegian Ministry of Finance. Nord Pool's Telephone based system for Exchange Trading. Cash Account denominated in NOK Listed Products and Cleared Products where NOK is designated in the Product Specification as the applicable currency. Nord Pool Clearing ASA, a public limited company operating as a derivatives clearing house authorised under Ver Dec

13 the Securities Trading Act Nord Pool Clearing Bank Guarantee Non-Allocated Buy Account Non-Allocated Sale Account Non-Exchange Trade Non-Exchange Trading Non-Listed Products Non-Pledged Cash Account Non-Pledged Cash Account Agreement Nord Pool Open Position Opening Trade Opposite Positions Option Cash Settlement Option Contract Option Exercise Option Exercise Price Option Exercise Settlements A standard on-demand guarantee document to be issued by a financial institution in favor of Nord Pool Clearing. Clearing Account set up by a Client Representative for registration of bought Contracts not allocated to another Clearing Account. Clearing Account set up by a Client Representative for registration of sold Contracts not allocated to another Clearing Account. Any Contract entered into outside the Trading Systems. Trading that is carried out outside the Trading Systems. Products series admitted for clearing but not listed by Nord Pool. Cash Account that is not pledged in favour of Nord Pool Clearing, to be used for cash Settlements. Agreement between an Account Holder, Nord Pool Clearing and a Settlement Bank, regulating a Non-Pledged Cash Account in this bank. Nord Pool ASA, a public limited company operating as a derivatives exchange authorised under the Exchange Act Contract registered in a Clearing Account. Trade establishing an Open Position. Bought and sold Contracts in the same Product Series. Call Option Cash Settlement or Put Option Cash Settlement. Contract between Option Holder and Option Writer under which the Option Holder, following Exercise, is entitled to Option Exercise Settlement pursuant to further provisions in the Clearing Rules Chapter 11. The Option Holder s utilising his rights under an Option Contract, through Automatic Exercise or Manual Exercise on the Expiry Day. Price set in the Product Specification for an Option Contract Series, which shall be applied in the Option Exercise Settlements. Option Cash Settlement and Registration of Underlying Ver Dec

14 Contract. Option Fixing Price Option Holder Option Premium Option Series Option Settlements Option Writer Order Pending Settlement Pledged Cash Account Pledged Cash Account Agreement Premium Settlement Principal Trade Primary Representative Product Series Product Specification for Non-Listed Products Product Specification for Listed Products A price calculated for the Underlying Contract at Expiry Date for an Option Contract, following the rules for Final Closing Price calculations. Party to an Option Contract that shall pay the Option Premium and subsequently will be entitled to Option Exercise. Price agreed between Option Holder and Option Writer when entering into an Option Contract, payable by the Option Holder to the Option Writer. All Option Contracts with the same contractual terms, except for the Option Premium. Premium Settlement and Option Exercise Settlements. Party to an Option Contract entitled to the Option Premium while under an obligation to perform Option Settlements following Option Exercise. A bid or offer to sell or buy a Listed Product that an Exchange Member registers in ETS or calls in to MTS. Settlement amount calculated by Nord Pool Clearing that is not due and therefore has not yet been included in the Daily Cash Settlement Amount. Cash Account pledged in favour of Nord Pool Clearing, used for cash Collateral deposits and cash Settlements. Agreement between an Account Holder, Nord Pool Clearing and a Settlement Bank, regulating a Pledged Cash Account opened in this bank. Option Holder s payment of Option Premium to Option Writer. A Trade entered into by a Clearing Member at its own account and risk. A Client Representative that represents a Sub- Representative. Futures Series, Forward Series, Option Series and CfD Series. Appendices to the Clearing Rules with standardised contract terms for Non-Listed Products. Appendices to the Trading Rules with standardised contract terms for Listed Products. Ver Dec

15 Put Option Cash Settlement Put Option Reference Price Registration of Underlying Contract Regulatory Body Representations Season Contract Seller Separate Clearing Accounts Series Settlement Settlement Bank Settlement Date(s) Settlement Time Spot Reference Cash Option Cash Settlement where the Option Holder shall receive and the Option Writer shall pay, the difference between the Option Exercise Price and the Option Fixing Price for the Underlying Contract. Option Contract entitling the Option Holder to, upon Option Exercise, to receive a Put Option Cash Settlement and/or to be registered as Seller of the Underlying Contract while the Option Writer shall pay the Put Option Cash Settlement and/or be registered as Buyer of the Underlying Contract, all as specified in the Product Specification. Spot Reference Price or any other reference price as specified in the Product Specification. Option Exercise Settlement where a new Underlying Contract is registered on the Clearing Accounts of the Option Holder and Option Writer. The Norwegian Ministry of Finance, BISC and any other public body with jurisdiction over Nord Pool Clearing or Nord Pool. The representations made by clearing Member or Clearing Client in the Clearing Membership Agreement and Clearing Client Agreement respectively. Contract where the Delivery Period is three, four or five months, as further specified in the Product Specification. Futures Seller, Forward Seller, CfD Seller or Option Writer. Clearing Accounts opened by an Account Holder to treated separately as provided for in the Clearing Rules. Product Series, also referred to as Futures Series, Forward Series, CfD Series or Option Series in respect of such Series. Daily Market Settlement, Expiry Market Settlement, Spot Reference Cash Settlement, Premium Settlement and Option Exercise Settlement. Bank having entered into a Settlement Bank Agreement with Nord Pool Clearing, as further identified in the List of Settlement Banks. Clearing Day specified in the Product Specification, when cash settlement shall take place for a Contract. Time specified in the Clearing Schedule when Daily Cash Settlement shall be effected. Settlement between Forward Buyer and Forward Seller, or Futures Buyer and Futures Seller or CfD Buyer and CfD Ver Dec

16 Settlement Spot Reference Price Spread Statement of Account Sub-representative Trade Trade Confirmation Trading Trading Day Trading Hours Trading Rules Trading System Underlying Contract Seller, for any differences between Final Closing Price and the Spot Reference Prices in the Delivery Period. The electric power price reference specified in the Product Specification. The best bid price and offer price in a Series registered in ETS at a point of time. Notice from Nord Pool Clearing to Account Holder each Clearing Day, stating Open Positions, Daily Margin Calls, Daily Cash Settlement Amount, Pending Settlements and other information regarding a Clearing Account. A Client Representative that is represented by a Primary Representative. A number of Contracts entered into as an Exchange Trade or Non-Exchange Trade. Nord Pool s confirmation of Exchange Trades to an Exchange Member in ETS or by MTS. The process of entering into a Contract, by Exchange Trading or Non-Exchange Trading. Day when Nord Pool is open for Exchange Trading, as further specified in the Trading Schedule. Period of time determined by Nord Pool every Trading Day when the Trading Systems are open for Exchange Trading, as further specified in the Trading Schedule. A set of agreements consisting of the Nord Pool Clearing Rules, including applicable Trading Agreements and Trading Appendices. ETS and MTS, being Nord Pool's trading systems. Financial Electricity Contract specified in the Product Specification for an Option Series. 5. CLEARING MEMBERSHIP REQUIREMENTS 5.1 Application for Clearing Membership Entities applying for Clearing Members with Nord Pool Clearing must send a written application to Nord Pool Clearing for membership in such form as prescribed by Nord Pool Clearing from time to time. The application shall include two signed originals of the Clearing Membership Agreement As part of the approval procedure Nord Pool Clearing may require and obtain further information on the Clearing Member's legal status, financial soundness, organisation, level of competence and other relevant matters. Ver Dec

17 5.1.3 Nord Pool Clearing may require an applicant to provide a satisfactory legal opinion on such issues that Nord Pool Clearing considers appropriate, including that the applicant is legally entitled to Trading and Clearing, that the Clearing Membership Agreement has been signed by a duly appointed representative, and that Contracts and Clearing Rules are valid and legally binding on the applicant Nord Pool Clearing shall only admit to Clearing Membership entities that Nord Pool Clearing in its sole discretion considers fit and proper Nord Pool Clearing is entitled to impose any additional conditions upon a Clearing Member that Nord Pool Clearing considers prudent, including any terms and conditions that may follow from legislation in the jurisdictions where the Clearing Member is domiciled Nord Pool Clearing shall in writing inform the applicant on the outcome of the application process. If the Clearing Member is approved, Nord Pool Clearing shall return a Clearing Member Agreement signed by Nord Pool Clearing When all the conditions set out in this chapter are met, Nord Pool Clearing will establish a Clearing Account for Principal Trading as provided for in Chapter Nord Pool Clearing shall promptly inform Nord Pool on the identity of the Clearing Member, for the purpose of Nord Pool's surveillance of the Market Conduct Appendix. Nord Pool may require a copy of the Clearing Membership Agreement. 5.2 Information duties Nord Pool Clearing may at any time request for and obtain credit information and otherwise monitor a Clearing Member's financial standing and soundness, level of competence and other matters relevant (in the opinion of Nord Pool Clearing) to the fit and proper ness of a Clearing Member. Each Clearing Member agrees promptly to provide such information and documents as Nord Pool Clearing may request, and to request any other party holding such information or documents on behalf of the Clearing Member, to release such information or documents Nord Pool Clearing may, without being prevented by any duty of confidentiality by any holder of information, request for and obtain such information and documents (where available) from the Clearing Member's bank connections or other sources of relevant information as Nord Pool Clearing considers prudent. Nord Pool Clearing shall as far as possible inform the Clearing Member on such requests. The Clearing Member shall promptly provide any additional waiver required for such disclosure A Clearing Member shall immediately notify Nord Pool Clearing in writing as soon as the member becomes aware of or finds it likely that any of the following events will occur in respect of the Clearing Member: a. Any Default Event. b. Any Non-Compliance under the Trading Rules or disciplinary, criminal, or regulatory proceedings related to Trading and Clearing activities involving the Clearing Member or its board of directors or employees responsible for its Clearing with Nord Pool Clearing. Ver Dec

18 c. Any merger, de-merger, or other business re-organisation of the Clearing Member affecting 1/3 or more of the member's net capital value in the application or latest furnished annual or interim report. d. Any major changes in the business operation of the Clearing Member. e. The Clearing Member being unable to or admitting its inability to pay its debts as they fall due, or being deemed under applicable law to be unable to pay its debts as they fall due, irrespective of whether constituting a Default Event or Insolvency Event. f. Any breach of the Representations. g. Any reduction in nominal share capital. h. Any credit downgrading The Clearing Member shall within two weeks of finalisation, furnish Nord Pool Clearing with a copy of any annual report and interim reports issued by the member, included consolidated accounts when legally required. The reports shall be provided to Nord Pool Clearing irrespectively of whether the Clearing Member is legally required to make them public. The Clearing Rules Chapter 14 on communication applies. 5.3 Client Representatives A Clearing Member may represent one or more Clearing Clients as their Client Representative in respect of Clearing with Nord Pool Clearing. A Clearing Client may be a Clearing Member, in which case Section applies A Client Representative must be approved by Nord Pool Clearing for this particular purpose. Nord Pool Clearing may impose further conditions for such approval. Following such approval, Nord Pool Clearing will establish the special Clearing Accounts provided for in Chapter The Clearing Member and the Clearing Client must enter into a Clearing Client Agreement A Client Representative may represent its Clearing Clients in respect of Clearing of Exchange Trades and Non-Exchange Trades. In respect of Clearing of Exchange Trades, the Client Representative must also be an Exchange Member Nord Pool Clearing will open at least one Clearing Account for the Clearing Client for each Client Representative appointed, identifying the relevant Client Representative. Trades may only be registered in this Clearing Account when allocated or approved by this Client Representative. The Clearing Client is without any limitations responsible towards Nord Pool Clearing for all Trades registered in its Clearing Account provided the registration was allocated or approved by this Client Representative All communication between Nord Pool Clearing and the Clearing Client shall take place through the Client Representative, unless otherwise provided for in the Clearing Rules. Ver Dec

19 5.3.7 The Client Representative is responsible for the following in respect of its Client Trades: a. The Client Representative shall ensure that its Clearing Clients posts Collateral for the Initial Margin Call before allocating any Trades to the Clearing Client's Clearing Account. b. The Client Representative shall also ensure that the Clearing Client at all times posts Collateral for the Daily Margin Call on the Clearing Account designated Nord Pool Clearing shall inform the Client Representative in case the Clearing Client fails to post Collateral upon which the Client Representative shall immediately post the Collateral missing. Any Collateral a Client Representative has posted for Principal Trading may be used by Nord Pool Clearing to cover Daily Margin Calls on Clearing Clients represented by the Client Representative, ref. Section When calculating Daily Margin Calls for a Client Representative, Nord Pool Clearing may add uncovered calls on its Clearing Clients Except for the duty to ensure that Collateral is posted as described above, the Client Representative has no liability towards Nord Pool Clearing in respect of its Client Trades The provisions on Clearing Clients also applies to Clearing Members when carrying out Clearing as a Clearing Client represented by a Client Representative, with the exemption for Section above and Chapter 6 below. Such entities (combined Clearing Members/Clearing Clients) may request Nord Pool Clearing to open a joint Clearing Account for all Trades that are subject to Clearing with Nord Pool Clearing, were both this entity and the Client Representative will be authorized to allocate Trades, ref. Section Section 12.2 applies to such entities In respect of a Primary Representative representing a Sub-Representative, all Trades shall initially be registered on the Intra Day Account of the Primary Representative, being sole responsible for allocating the Trade to the Clearing Accounts of the Clearing Clients. Both Client Representatives are responsible for ensuring that Collateral is posted pursuant to Section for Client Trades. All communication concerning the Clearing Clients shall take place between Nord Pool Clearing and the Sub-Representative, save that the Primary Representative shall be informed of the total Collateral Call on the Sub-Representative for its Principal Trading and Client Trading. 6. CLEARING CLIENT REQUIREMENTS 6.1 Approval of Clearing Clients Entities not being Clearing Members may have their Trades subject to Clearing with Nord Pool Clearing when represented by a Client Representative and approved as Clearing Client with Nord Pool Clearing The Client Representative shall on behalf of the Clearing Client send an application to Nord Pool Clearing to be approved as Clearing Client, in such form as prescribed by Nord Pool Clearing from time to time. The application shall include three signed originals of the Clearing Client Agreement. Ver Dec

20 6.1.3 As part of the approval procedure Nord Pool Clearing may require and obtain further information on the Clearing Client's legal status, organisation, financial soundness, level of competence and other relevant matters Nord Pool Clearing may require an applicant to provide a satisfactory legal opinion on such issues as Nord Pool Clearing considers appropriate, including that the applicant is legally entitled to Trading and Clearing, that the Clearing Client Agreement has been signed by a duly appointed representative, and that Contracts and Clearing Rules are valid and legally binding on the applicant Nord Pool Clearing will only admit Clearing Clients that Nord Pool Clearing in its sole discretion considers fit and proper for this status Nord Pool Clearing is entitled to impose any additional conditions upon a Clearing Client who Nord Pool Clearing considers prudent, including any terms and conditions that may follow from legislation in the jurisdictions where the Clearing Client is domiciled Nord Pool Clearing shall in writing inform the Client Representative on the outcome of the application process for the Clearing Client. If the Clearing Client is approved, Nord Pool Clearing shall return to the Client Representative two sets of the Clearing Client Agreement signed by Nord Pool Clearing When all conditions set out in or pursuant to this chapter are met, Nord Pool Clearing will establish a Clearing Account for the Clearing Client pursuant to Section 7.1. The Client Representative is authorized to represent the Clearing Client as provided for in Section 5.3 and the rest of the Clearing Rules Nord Pool Clearing shall promptly inform Nord Pool on the identity of the Clearing Client, for the purpose of Nord Pool's surveillance of the Market Conduct Appendix. Nord Pool may require a copy of the Clearing Client Agreement. 6.2 Information duties Nord Pool Clearing may at any time request for and obtain credit information and otherwise monitor a Clearing Client's financial standing and soundness, level of competence and other matters relevant (in the opinion of Nord Pool Clearing) to the fit and proper ness of a Clearing Client. Each Clearing Client agrees promptly to provide such information and documents as Nord Pool Clearing may request, and to request any other party holding such information or documents on behalf of the Clearing Client, to release such information or documents Nord Pool Clearing may, without being prevented by any duty of confidentiality by any holder of information, request and obtain such information and documents (where available) from the Clearing Client's bank connections as Nord Pool Clearing considers prudent. Nord Pool Clearing shall, as far as possible, inform the Client Representative of such request. The Clearing Client shall promptly provide any additional waiver required for such disclosure A Clearing Client shall immediately notify Nord Pool Clearing in writing as soon as the Clearing Client becomes aware of or finds it likely that any of the following events will occur in respect of the Clearing Client: Ver Dec

21 a. Any Default Event or Insolvency Event. b. Any Non-Compliance or disciplinary, criminal, or regulatory proceedings related to Trading and Clearing activities involving the Clearing Client or its board of directors or employees responsible for its Clearing with Nord Pool Clearing. c. Any merger, de-merger, or other business re-organisation of the Clearing Client affecting 1/3 or more of the customer's net capital value pursuant to application or the latest furnished annual or interim report. d. Any major changes in the business operation of the Clearing Client. e. The Clearing Client being unable to or admitting its inability to pay its debts as they fall due, or being deemed under applicable law to be unable to pay its debts as they fall due, irrespective of whether constituting a Default Event or Insolvency Event. f. Any breach of the Representations. g. Any reduction in nominal share capital. h. Any credit downgrading The Clearing Client shall within two weeks of finalisation, furnish Nord Pool Clearing with a copy of its annual report and interim reports issued by the Client, including consolidated accounts on group level when legally required. The reports shall be provided to Nord Pool Clearing irrespectively of whether the Clearing Client is legally required to make them public. The Clearing Rules Chapter 14 on communication applies. 7. ESTABLISHMENT OF ACCOUNTS 7.1 Clearing Accounts When approving a Clearing Member, Nord Pool Clearing shall establish one or more Clearing Accounts with the member as Account Holder, for registration of its Principal Trades When approving a Clearing Client, Nord Pool Clearing shall establish one or more Clearing Accounts with the Clearing Client as Account Holder. The Clearing Account shall identify the Client Representative and be used for registration of Trades for the Clearing Client's account and risk that is allocated or approved by this Client Representative When approving a Client Representative, Nord Pool Clearing shall establish an Intra Day Account for preliminary registration of Principal Trading and Client Trading, and a Non-Allocated Buy Account and a Non-Allocated Sale Account for registration of contracts not allocated to another Clearing Account as provided for in Section Nord Pool Clearing will open the Clearing Accounts mentioned for registration as soon as Collateral has been provided for the Initial Margin Call. Ver Dec

22 7.1.5 Registration of Contracts in the Clearing Account represents the exclusive and binding contractual relationship between Nord Pool Clearing and the individual Account Holder in respect of each Trade that is subject to Clearing. All Contracts registered in a Clearing Account is held to constitute one single agreement between Nord Pool Clearing and the Account Holder An Account Holder with several Clearing Accounts may request that these are treated as Separate Clearing Accounts. Margin Calls will be calculated separately and Joint Cash Accounts can not be opened for Separate Clearing Accounts. Nord Pool Clearing may not off-set claims related to different Separate Clearing Accounts or foreclose Collateral provided for one Separate Clearing Account to cover claims related to another Separate Clearing Account, or withhold Settlement for a Separate Clearing Account to secure claims related to another Separate Clearing Account. 7.2 Cash Accounts For each Clearing Account opened, the Account Holder shall open a Cash Account pursuant to the following rules: a. The Account Holder may, when accepted by Nord Pool Clearing, open a Pledged Cash Account in accordance with the Pledged Cash Account Agreement. This account shall be used for Cash Collateral deposits and cash Settlements, and be blocked so that only the balance in excess of Collateral Calls, following the eventual debit of the Daily Cash Settlement Amount this Clearing Day, may be disposed of without approval from Nord Pool Clearing. b. The Account Holder may alternatively open a Non-Pledged Cash Account in accordance with the Non-Pledged Cash Account Agreement. This account shall be used for Settlements and Cash Margin deposits. It shall not be pledged, but shall be blocked so that only the balance in excess of Collateral Calls, following the eventual debit of the Daily Cash Settlement Amount this Clearing Day, may be disposed of without approval from Nord Pool Clearing Nord Pool Clearing shall, as further provided for in the Pledged Cash Account Agreement and Non-Pledged Cash Account Agreement have a right of disposal over the Cash Account to be used to debit amounts the Account Holder owe Nord Pool Clearing and which are due under Chapter 11 and The provision above equally applies to the Clearing Accounts opened for a Client Representative pursuant to Section The Client Representative must establish a joint Cash Account for these Clearing Accounts and its Clearing Account for Principal Trading An Account Holder with several Clearing Accounts may choose to open a joint Cash Account for the Clearing Accounts. Daily Margin Calls will in this case be calculated jointly for all the Clearing Accounts. Clearing Clients may only have a joint Cash Account for the Clearing Accounts allocated by the same Client Representative, save as provided for in Section NOK Cash Accounts shall be applied for NOK Products. Ver Dec

23 7.2.6 Euro Cash Accounts shall be applied for Euro Products. From 1 January 2004 Euro Cash Accounts must be established for Clearing of new Trades in Euro Products and for Cash Collateral deposits and Settlement for registered Open Positions and Pending Settlements in Euro Products. In the event that an Account Holder fails to establish a Euro Cash Account, Nord Pool Clearing may close out his Open Positions in Euro Products and effect a close out settlement. The close out will be in NOK after conversion form Euro. Nord Pool Clearing shall apply Norwegian Central Bank exchange rates adjusted with the spread Nord Pool Clearing finds proper. An Account Holder carrying out Trading and Clearing in Euro Products prior to opening a Euro Cash Account will be subject to a fee (Euro 1200). Similar fees may be applied for Account Holders not complying with the second sentence of this paragraph. 8. CLEARING PROCEDURES 8.1 Clearing of Exchange Trades Clearing Members and Clearing Clients have a right and a duty to clear all their Exchange Trades with Nord Pool Clearing. The Product Specification for Listed Products applies to such Trades, as supplemented by the Clearing Rules All Exchange Trades are automatically subject to Clearing with Nord Pool Clearing. The Trade Confirmation in respect of Exchange Trades also serves as Clearing Confirmation from Nord Pool Clearing Nord Pool will notify Nord Pool Clearing of all Exchange Trades registered in ETS, by sending an electronic notice with the terms of the Contract and the Exchange Members/Clearing Members involved Nord Pool Clearing shall register the Exchange Trades on the Clearing Account of the involved Clearing Members immediately following such notification. Trades carried out by Client Representatives will be registered on the Client Representatives' Intra Day Account, for further allocation as provided for in Section When registered in the Clearing Account, the initial Exchange Trade shall be replaced (by novation) by two sets of identical Contracts with the Account Holder and Nord Pool Clearing as counter parties; one between the Seller and Nord Pool Clearing and one between the Buyer and Nord Pool Clearing, in each case as principals to the Contract. 8.2 Clearing of Non-Exchange Trades Clearing Members and Clearing Clients may request Nord Pool Clearing for Clearing of Non-Exchange Trades in Cleared Products, subject to the provisions below Nord Pool Clearing decides which Non-Listed Products that may be subject to Clearing, by issuing Product Specifications for such Product Series Nord Pool Clearing specifies in the Clearing Schedule the Clearing Days and Clearing Hours when Clearing Requests are received and processed. Ver Dec