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European Energy Exchange AG (EEX) is well prepared for the start of the second trading period for emission allowances under the Kyoto Protocol. Currently, the energy exchange, which boasts the highest growth in Europe, is expanding its range of offers in the field of trading in emission allowances in order to be able to include new products and continuously expand its market share in this trading segment, which is increasingly gaining in importance, on a European level. Maik Neubauer, member of the management board and chief operating officer of European Energy Exchange AG, sees EEX in its capacity as an exchange under public law as the natural partner for the auction of 10 per cent of the emission allowances planned for the next trading period. In addition to the core business of power and the establishment of the German gas exchange, trading in emission allowances forms the third strategic pillar in the framework of the multi-commodity strategy pursued by EEX in the long run.
In order to be able to adjust to the trading participants’ requirements in the framework of the second trading period at the beginning of which the emission allowances will be issued in the course of the national allocation plans of the EU member states during the first quarter of 2008 EEX is currently implementing a further optimisation of the trading and settlement processes as well as of the contract specifications. In addition to trading in CO2 emission allowances on the Spot and Derivatives Market, EEX will also integrate trading in project-specific emission permits arising in the framework of climate protection projects into the process of exchange trading as well as into OTC clearing.
In this context, the so-called CERs (Certified Emission Reductions), which are generated in the course of climate protection projects in developing countries and which will become an element of the increasingly global trading in CO2 emission allowances, will play a major role in the future. According to Maik Neubauer, international trading in Certified Emission Reductions will have considerable influence on the development of prices on the CO2 markets in the future. EEX will offer trading in CERs on its Spot Market to the trading participants in the course of this year once the International Transactions Log (ITL) has been implemented.
With its comprehensive product range the Leipzig-based European energy exchange wants to cater in particular to the trading participants from the financial services sector, for whom simple access as well as very fast settlement of the transactions is of the utmost importance, in addition to the industrial buyers of emission allowances. By means of the combination of the trading products in the market segments of power, gas, coal and emission allowances EEX offers a broad basis for future new derivative spread products as well as efficient cross-margining minimizing both liquidity and risk in the collateralisation and settlement of the trading transactions through its subsidiary, European Commodity Clearing AG.
European Energy Exchange (EEX) operates a Spot and a Derivatives Market for energy products. With more than 160 trading participants from 19 countries it is the energy exchange in continental Europe which boasts the biggest number of trading participants and the highest turnover. Power, CO2 emission allowances and coal are traded both short-term on the Spot Market and long-term on the Derivatives Market with a time horizon of up to six years into the future and, moreover, trading in gas will be launched in July 2007 along the same lines. Clearing of exchange and over-thecounter transactions (OTC clearing) is provided by European Commodity Clearing AG (ECC). ECC is the clearing house of EEX and a subsidiary of the exchange.
