Clearing and Settlement Initiatives 2013/2014

Transcription

1 Clearing and Settlement Initiatives 2013/2014

2 Agenda 1. Introduction of ECC 2. Milestones since June Product innovations - Partner Exchanges 4. ECC The clearing house serving the European Energy Markets 5. Widening the scope: ECC serving the Commodity Markets 1. PXE - Power Exchange Central Europe 2. Cleartrade Exchange 3. Norexeco 4. Gaspoint Nordic 6. The Fosbory Flop 7. Straight Through Processing 8. Limit Management 2

3 Introducing ECC International network of commodity market participants 361 Non-Clearing Member ( ) 21 Clearing Member ( ) 26 Countries ( ) 3

4 Milestones since June 2013 June 2013 Successfully launch of the Swiss Intraday market Sep 2013 Clearing and settlement services for all transactions concluded on the Prague based Power Exchange Central Europe (PXE) products: Czech, Slovak and Hungarian Power Futures EMIR license application filed Dec 2013 Introduction of EUA as Margin Credit NOREXECO to Cooperate in the Commodity Sector with ECC EEX, ECC, OMIP and OMIClear to Cooperate in Trade Registration of Power Derivatives Feb 2014 Mar 2014 May 2014 EMIR Trade reporting services launched NWE Market Coupling Connecting CWE, Nordic and UK day-ahead spot markets Trade registration for Spanish Power Futures introduced SWE and NWE markets successfully coupled connecting day-ahead spot markets from Finland to Portugal under a common day-ahead price calculation (PCR) Improvements of Straight-Through-Processing 4

5 Product Innovations - Partner Exchanges GOOs Italian Power Futures Swiss Power Futures Dutch Power Futures Belgian Power Futures Spanisch Power Futures Relaunch of Coal and physical fulfilled French Futures Price Coupling in North- Western Europe (NWE) SWE and NWE coupled, now operating under a common dayahead price calculation EEX and Powernext launch PEGAS Quality specific natural gas products (L-/H- Gas) for NCG and Gaspool Front Month product on PEG Sud 9th July 2014: launch of 24/7 trading for PEG Spot Markets and Zeebrügge 4M MC Project: The Slovak, Hungarian, Romanian and Czech market operator and the local exchanges intending to implement a coupling solution for the day-ahead markets CEGH and the Czech Power Exchange Central Europe (PXE) commonly launched the CEGH Czech Gas Futures Market 5

6 ECC The clearing house serving the European Energy Markets physical delivery / order book(s) OTC registration and fin. Settlement only French and Dutch Natural Gas Phelix Futures & Options French, Dutch, Italian, Belgium, Romanian, Swiss, Spanish and Nordic Power Futures EUA, CER, EUAA & ERU Futures Coal Futures (USD/EURO), GOOs Emission Spot and primary auction NCG, Gaspool, NBP Gas German, French, Austrian, Swiss Power Spot, NEW, SWE Czech / Slovakian / Hungarian Power Hungarian Power Austrian Natural Gas / Czech natural gas

7 Product innovations - Partner Exchanges It is getting much more colourful Recovered Fibre Power Emissions Pulp Coal Containers Natural Gas Fertilizer Freight Fuel Oil Steel Iron Ore 7

8 PXE Power Exchange Central Europe September 2013 PXE was established in 2007 PXE is a subsidiary of the Prague Stock Exchange and part of the Central European Stock Exchange Group. European Commodity Clearing AG (ECC) and PXE signed a cooperation agreement and PXE agreed to replace the existing clearing & settlement with the ECC clearing. ECC has taken over the clearing & settlement functions from the former Clearing House of PXE per September Products ECC offers clearing services for PXE: Payment Agent for the Spot Market transactions Physical and financial Czech Power Futures Physical and financial Slovakian Power Futures Physical and financial Hungarian Power Futures 8

9 Cleartrade Exchange Singapore Q EEX has become a majority shareholder, with a 52% holding in Cleartrade Exchange by the end of December The acquisition by EEX makes ECC the natural clearing house for the Cleartrade Exchange: Cleartrade Exchange (CLTX) is a Regulated Market Operator (RMO) under a license of the FSA in Singapore with offices in Singapore and London. The trading system allows the choice between multiple central counterparts. Products traded at Cleartrade will be cross-listed at EEX. Clearing will be performed by registration at EEX, ensuring EMIR compliant derivatives status. Products Trading Screen Trade Registration Clearing House Containers Fertilisers Freight Fuel Oil Steel Iron Ore 9

10 NOREXECO Q NOREXECO AS and ECC signed a Clearing Services Agreement establishing a cooperation for the clearing and settlement of initially financial Pulp and Recovered Fibre Futures: NOREXECO is based in Kongsvinger (near to Oslo), Norway NOREXECO currently requests the admission as Regulated Market according to Norwegian laws, as a consequence the exchange will be regulated by the Financial Supervisory Authority of Norway Depending on regulatory approval, the launch of the Exchange is expected for September NOREXECO plans to start offering the following futures contracts for exchange trading: NOREXECO Pulp Futures - PIX Pulp Northern Bleached Softwood Kraft Pulp Europe - PIX Pulp Bleached Hardwood Kraft Pulp Europe NOREXECO Recovered Fibre Futures - PIX Recovered paper Old Corrugated Containers - PIX Recovered paper Old Newspapers/Old Magazins Further product offerings are in the pipeline 10

11 Gaspoint Nordic October 2014 Energinet.dk and Nord Pool Spot established Gaspoint Nordic (Nord Pool Gas) in 2007 with the aim of creating a transparent and competitive market place. The gas exchange Gaspoint Nordic organizes physical trade of natural gas. The Gaspoint Nordic currently offers the following products: Day contracts Withinday contracts Weekend contracts Swap contracts (NPTF and Gaspool Hub) Further contract offerings under preparation. The introduction of the European target model for gas in Denmark requires the establishment of 24/7 clearing services. ECC and Gaspoint Nordic have signed an LOI in order to cooperate. By establishing the clearing services, ECC enables Gaspoint Nordic to offer 24/7 trading. With the operation of the Danish gas spot market in addition to Belgium and UK, ECC will serve 12 gas hubs across Europe. 11

12 The Fosbory Flop 12

13 Straight through processing of broker trades has been on the rise at EEX and ECC since last year % of broker trades processed via STP solution vs. manual trade registration but what is behind this development? 13

14 STP bridges over-the-counter trading at brokers with trade registration on a regulated market and clearing Member A Trade OTC Trading Broker Trade Member B exrp / Trayport Straight Through Processing NCM A Portfolio Accept Clearing Member A (Automatic) Confirmation by NCM A Automatic Entry by Broker Exchange Registration ECC Clearing (Automatic) Confirmation by NCM B NCM B Portfolio Accept Clearing Member B 14

15 Benefits of Straight-Through Processing Eliminates manual re-entry of trade details already captured in the broker system Reduced risk for clients Reduced effort for brokers Reduces the need for manual confirmation of trade details already confirmed in the broker system Reduced effort for clients Reduced risk for brokers Reduces cycle-time from trading on broker venue to clearing confirmation by ECC Reduced risk for clients Reduced risk for brokers 15

16 The broker can choose to bear the risk of an open position or not as per contract with it s client Per side of the trade the broker stipulates whether it is to be processed as Direct or as Give-up by the STP solution. Scenario 1: Direct trade side ( Broker does not bear risk of holding a position) Automatic Entry by Broker (Automatic) Approval by NCM Exchange Registration NCM Portfolio ECC Clearing Position is directly opened on NCM account, once the trade is approved by NCM (and the other side is approved*) Approval can be automated Scenario 2: Give-up trade side ( Broker bears risk of holding a position) Automatic Entry & Give-up by Broker Exchange Reg. (Automatic) Take-up by NCM ECC Clearing NCM Portfolio Position is automatically opened on the broker s account (once the other side is approved* too) and given-up to the NCM for take-up Take-up can be automated * Other side is approved, if it is a give-up side or once approval is provided by counterparty addressed directly 16

17 By default, trades marked as Automatically Matched are automatically confirmed for the client High STP Always Already Confirmed Automatically Matched STP Default Setting Never (Opt-out) Auto confirms any trade, regardless of whether Automatically Matched or Already Confirmed conditions are fulfilled In addition to Automatically Matched, also auto confirms trades marked as Already Confirmed by the broker Requires a Confirmation window functionality at the broker (for voice and/or on-behalf deals) Auto confirm all trades that are marked as Automatically matched by the broker system; two requirements as per ECC definition: Screen-traded, i.e. executed through the electronic order book of the broker (i.e. not a voice trade entered by the broker) Customer-entered, i.e. a trader from the counterparty has traded personally (i.e. not a broker on-behalf of the client) Automatic Confirmation functionality is completely deactivated Low STP Trading participants are obliged to check the registrations and submissions to the ECC clearing system effected by using STP systems forthwith, however, no later than until the beginning of the next trading day. Objections to trades can be raised with EEX Market Supervision. 17

18 Automatic Confirmation settings can be adjusted as required through ECC Form T08 18

19 Wrap-up One Electronic Process Automatic Confirmation Direct Trades Non Trading Brokers All trades can be entered by the broker through the STP solution Buy and sell side can be independently processed as: direct entry on counterparty account ( approval) entry on broker account and give-up ( take-up) EFETnet exrp and Trayport Hosted Clearing Link SM operate via a single electronic portal and process Automatic Confirmation (incl. approval & take-up) is now activated by default for all trades reported as Automatically matched Possibility for clients to enhance Auto Confirmation (e.g. Always ) or to deactivate Auto Confirmation ( Opt-out ) via ECC form T08 Direct Trade means both sides are directly registered on the counterparties, none is registered on the broker no give-up Only when both sides are (automatically) approved, the trade is firm and cleared by ECC, approval possible by 17:30 CET New EEX membership model Non Trading Broker (NTB), restricted to direct trades, i.e. never holding a position No requirement for a Clearing Member lower cost! 19

20 As a multi-exchange clearing house, ECC is ideally positioned to centrally organize limit management Flow of trades and positions (i.e. risk) Flow of risk control (i.e. trading limits) Client 1 Client 2 Client 3 Client 4 Client 5 Client 1 Client 2 Client 3 Client 4 Client 5 Exch. 1 Exch. 2 Exch. 3 Exch. 1 Exch. 2 Exch. 3 ECC ECC CM 1 CM 2 CM 3 CM 1 CM 2 CM 3 A comprehensive limit solution can reduce the demand for collateral by CMs A centralized solution reduces the number of interfaces for each partner 20

21 Thank you for your attention! Thomas Bergerhoff Clearing Strategy Phone: Pieter Hauffe Clearing Initiatives & Cooperations Phone: