OM Technology sets up CalPX derivatives market

In the beginning of June this year, the California Power Exchange (CalPX) will launch a new market for power derivatives trading. The technical operation of the market will be carried out by OM Technology under a facility management agreement with CalPX. Initially CalPX will offer its participants a market for forward trading. Development of the new market has been underway since February this year. Derivative trading volumes are expected to pick up gradually as market participants start to use block forward contracts to manage the price risk. "The US deregulated power market will grow substantially during the forthcoming years. Since our inception a year ago we have become the world's largest spot market for electricity. Now we are introducing a forward market, which implies increased market efficiency and ultimately lower prices for the electricity consumers. Our long-term goals are o first remain California's energy marketplace and then to expand beyond the current markets to provide services for the entire western region", says George Sladoje, President and CEO of CalPX. As the first deregulated power market in the US, CalPX initiated operations end of March last year. The first year was successful with trading averaging 517,842 MWh per day. Today more than 60 market participants trade in the day-ahead market. The system used for the spot market was developed by OM Technology, which will now also develop the electronic derivative marketplace. "We are excited to work with CalPX. Our experiences from the Nordic power market show that as the market matures, the need for derivatives trading facilities increases. Through their use of our technology, CalPX will be very well positioned to continue to lead developments in the North American power market. The fact that we are participating in this project on a shared risk basis is also highly stimulating", says Magnus Karlsson, President of OM Technology. From the delivery to the CalPX, OM will partly receive a fixed fee and partly an unlimited variable, success-related fee. OM Technology is the world's leading provider of exchange technology. OM Technology is part of the Swedish OM Group. OM applies advanced transaction technology to increase the efficiency of financial and energy markets worldwide. This is done both by developing trading technology and by operating exchanges (the OM Stockholm Exchange and the OM London Exchange). The parent company, OM Gruppen, is listed on the OM Stockholm Exchange.