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The creation of the gas exchange market is part of the scope of the implementation activities of the European internal market for electricity and gas and their regional markets, as proposed by the European Commission and the European Council. Accordance with the EU guidance, the Member States must ensure that, in terms of energy and gas, their citizens are provided with, among others: a fully competitive, liquid and transparent market, the possibility of free choice of supplier, fair and optimally set prices and the security and reliability of gas supply.
"The launch of gas exchange is a very significant change when it comes to the business activity of the Warsaw Stock Exchange, not only as the organizer of trading, but also as an institution that once again brings new quality to the Polish market", emphasizes Ludwik Sobolewski, President & CEO of the Warsaw Stock Exchange.
"The first gas exchange transactions will be performed in the Base contracts with physical delivery in 2013 on the Commodity Forward Instruments Market with Physical Delivery (CFIMg). Starting the Day-Ahead Market will also be possible this year", said Ireneusz Lazor, President of POLPX. "Liquidity can be ensured by, among other things, investments in the expansion of transmission infrastructure and the introduction of legal solutions, which are used in the electricity market, such as the so-called exchange obligation. Work on defining the rate of the obligation is currently underway", adds President Lazor.
Thanks to the launch of the blue fuel trading platform participants will have the information about transaction conditions, similarly to the electricity market, where more than 80 percent of the total wholesale trade in this commodity in Poland is currently traded on POLPX. The development of wholesale gas trading on the exchange will increase the transparency and improve access to supplies of the fuel. This, in turn, will allow market participants conclude more favourable contracts corresponding to the current EU market conditions.
Market Organisation
At each CFIMg session, market participants will have the opportunity of trading monthly, quarterly and yearly BASE-type contracts. The product will consist in the delivery of a certain gas quantity over all the hours of the delivery period. Continuous trading is scheduled to take place on weekdays from 8:00 am to 2:00 pm. Quotations for each contract series will be conducted in accordance with the quotation and execution calendar. The market price of each contract will be expressed in PLN per 1 MWh.
Under current law, the conclusion and clearing of commodity exchange transactions on the gas market is only possible through the brokerage houses and commodity brokerage houses that are members of POLPX and members of the Exchange Clearing House operated by WCCH. The first brokerage houses which have signed appropriate agreements for the operation on the gas market are: BOS Brokerage House, Noble Securities and Trigon Brokerage House. Undoubtedly, one of the first entities to sell on the exchange will be Polish Oil and Gas Company. As announced by the company, 100 million cubic meters of blue fuel will initially be admitted for trading. Several independent companies operating in the gas market in Poland also expressed interest in the gas market.
Transaction Clearing and Security
Gas market transactions will be cleared and settled by the Warsaw Commodity Clearing House. A risk management system operated by WCCH guarantees the security of settlement for all Clearing House Members, should any of the counterparties become insolvent. Transaction clearing by the WCCH carries a guarantee of payment for the gas sold.
Physical Gas Delivery - Agreement between POLPX and GAZ-SYSTEM
According to the agreement concluded between POLPX and GAZ-SYSTEM, transactions executed on the gas exchange are valid and enforceable between the parties and shall be completed by GAZ-SYSTEM. Following transactions made on the gas exchange, POLPX will submit nominations for and on behalf of the Shippers. Exchange users will be able to transactions for physical delivery by GAZ-SYSTEM, provided that they have a transmission agreement with GAZ-SYSTEM. Signing the agreement with GAZ-SYSTEM, including allocation of capacity for the virtual point associated with the exchange, is essential to participate in gas trading on POLPX.
