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EEX Exchange Council Approves Product Expansion With British Power Futures - Debate Regarding Price Zone Design – Representative Of Energy Science Elected

Date 22/09/2015

On 16 September 2015, the meeting of the Exchange Council of the European Energy Exchange (EEX) was held in Zurich and was chaired by Peter Heydecker, Vitol SA. At the meeting, the focus was on the expansion of the product portfolio with British Power Futures as well as the discussion of the regulatory environment, in particular, the price zone debate. 

EEX is planning to expand its product portfolio with British power contracts from 16 November 2015. The maturities will cover days, weekends, weeks, months, quarters and seasons as well as calendar years as a supplement for the British market. The index on the British spot market of APX, which became part of EEX Group in May 2015, will form the underlying for these financial futures, denominated in British pounds (GBP). With this new offer, EEX continues its strategy of regional expansion. The Exchange Council approved the product launch and welcomed EEX’s further expansion of its European portfolio which will offer the participants an even broader product range as a one-stop-shop solution.

Over the past months, EEX generated significant growth not only in its core markets in Germany, France and Italy but also in new regions. For example, a volume of 9.0 TWh was registered in Spanish power futures from January to August 2015 as against 0.6 TWh in the same period in 2014. Moreover, EEX also recorded growing volumes in the Swiss, Dutch and Greek market areas.

In the context of the current debate regarding the design of  European price zones, the Exchange Council expressly warned against splitting up the German-Austrian price zone. This would also directly jeopardise the European derivatives market and, in particular, the high liquidity within the German-Austrian price zone. Instead, the “Phelix” index, which is established by EPEX SPOT on a daily basis and is already considered a reference price in both exchange and over-the-counter trading even beyond the German-Austrian price zone, should be strengthened. Cross-border cooperation, especially the financing of grid expansion and operation measures should be intensified rather than splitting up price zones. The Exchange Council called upon all parties involved in this discussion to jointly develop appropriate solutions and specifically, to consider the requirements of the derivatives market in this debate.

Additionally, the Exchange Council looked into the impact of the MiFID II/MiFIR financial market regulation on the market. In this respect, the debate focused on the ancillary activity exemption for commodity derivatives trading. If this exemption is not designed appropriately, it can have significantly negative effects on liquidity on the wholesale market and, as a result, on energy costs overall. In this debate, the Exchange Council emphasised that such a development would clash with the aim of achieving an efficient and integrated energy market.  

Finally, the Exchange Council welcomed Prof. Dr. Christoph Weber as a new member. Prof. Weber is a renowned expert with long-standing experience in the field of energy markets and systems. At present, he holds the energy industry chair at the University of Duisburg-Essen and, in the capacity of the “representative of energy science”, he will provide the Exchange Council with the research and science perspective in future.

The Exchange Council of EEX is an official body of the exchange under the German Exchange Act. It consists of a total of 24 members who expertly represent the various relevant interest groups and business circles. In addition to the trading participants who are represented by 19 elected members from five different voting groups, four representatives from associations and one representative of energy science belongs to the Exchange Council. The tasks of the Exchange Council include the formulation of the rules and regulations of the exchange and their amendments. The Exchange Council is also tasked with the supervision of the Management Board of the Exchange and the appointment of the Head of the Market Surveillance.