European Energy Exchange AG (EEX) is about to end the best year ever in the history of the company. On the basis of a considerable increase of the trading volumes on the Spot and Derivatives Markets of the exchange as well as of a continuous increase in the number of national and international trading participants the expectations of EEX have been fulfilled in their entirety in the course of the year so far.
On the Spot Market EEX has reached the level of 80 TWh in December and more than 480 TWh were registered on the Derivatives Market at that time. “We have responded to the considerably increased interest in derivatives trading by opening the market place earlier – now, trading already commences at 8:30 am instead of at 9:00 am”, Dr. Hans-Bernd Menzel, chairman of the management board of the European Energy Ex-change and managing director of the exchange, explains. In this way the exchange has extended its opening hours to the hours usual in over-the-counter futures trading.
The development of the open interest – which corresponds to the total of all buy and sell offers which have not been included in a transaction yet - testifies to the further in-creasing confidence which the trading participants place in EEX. As of 30 November 2005 the open interest amounted to approx. 140 TWh, which corresponds to a market value of more than EUR 7 billion.
Moreover, the considerable expansion of the clearing business in the course of the year underlines the increased acceptance and the confidence which the market has in the integrated clearing system of EEX. In this context the netting out of the margins to be furnished across different products as well as across the Spot and Derivatives Mar-ket enables the trading participants to reduce their capital costs. By now, 11 renowned clearing banks are available for safe settlement of the exchange transactions.
Considerable pick-up in emissions trading during the second half of the year
On 9 March 2005 EEX started the first spot auction in EU emission allowances in Europe even before the national emission trading register in Germany was fully func-tional. Continuous spot trading, a derivatives market and OTC clearing for emission al-lowances then followed during the second half of the year during which CO2 trading on EEX gained in momentum to a considerable degree. The climax in the development so far was reached on 16 December 2005 with a total volume of 186 099 emission allow-ances. In particular smaller and medium-sized companies increasingly use the possibil-ity of trading emission allowances on EEX via banks, similar to stock trading by means of a deposit at the respective house bank.
Both in the field of power and of emissions trading EEX has stepped up its commitment in central and eastern Europe and will also pay special attention to the new EU mem-ber states during the next year. Hans-Bernd Menzel, the head of EEX, sees in particu-lar the trading system across different products and the integrated clearing as a major strategic advantage: “Our trading participants can trade all derivatives and spot prod-ucts by means of one single platform and get clearing as a one-stop service. Who else can offer this?”
EEX already has two Czech participants and one Slovak participant. Further eastern European companies are in the pipeline. In the course of the year 2005 the number of trading participants increased from 123 to 130 companies from in total 16 countries.
In addition to its focus on eastern Europe EEX is also intensifying its activities in the western neighbouring countries. For example the exchange introduced OTC clearing for France at the end of August and the French Power Future which was launched at the same time will go into the delivery stage for the first time in January. EEX has con-cluded a balance agreement with the national Swiss transmission system operator Etrans on 1 December 2005.
First annual net profit
According to a statement by the chairman of the management board the biggest en-ergy exchange on the European continent will be able to report an – even distinct – an-nual net profit for the first time ever against this positive overall background. “For this reason we will achieve the big milestone of the break even one year earlier than origi-nally planned“, the 50-year old head of EEX, under whose leadership the exchange has managed to move from a net loss of EUR 21.8 million in 2002 to the profit zone un-til the end of 2005, is pleased.
Special attention regarding the topic of transparency
The Exchange Council of EEX will make transparency one its major topics in the com-ing year. Therefore the first meeting in 2006 will be focusing on this issue, Dr. Jacques Piasko, Chairman of the Council announced. This executive body will fulfil its responsi-bility as a democratically elected, representative controlling body of the exchange to the full extent and will actively contribute to the enhancement of transparency in the electricity market. The management board of the exchange assured the supervisory board that it would get all the support it needs in its endeavours.
