German Power Clearing Service Launch Realises Pan-European Clearing Service

Spectron Group, a leading provider of services to the energy industry, and UK Power Exchange, the energy market division of OM London Exchange Ltd. today announces the launch of a clearing service for German bilateral power market. The German power clearing service is based on the RWE Net grid system, and contracts can be cleared for maturities of up to two years. The clearing of German power and UK power bilateral contracts will soon be joined by a UK gas clearing service, making this the first true pan-European, multiple energy commodity clearing platform.

Andrew Stephens, Chief Operating Officer of Spectron Group said: "We have lived up to our firm commitment and are delighted to be able to offer this service in German power clearing that the market has been asking for. The success of the service is dependent upon the traders of German power: if they wish to use the service then all they have to do is complete the necessary paperwork and 'go-live'. This is a critical step towards our goal in helping create a marketplace where cleared European energy products can be cross-margined leading to more efficient use of capital.

Fredrik Voss, Head of the UK Power Exchange, said: "Our customers have shown more and more interest for clearing which makes absolute sense, since it will help them free up credit lines and bank guarantees currently locked up in their bilateral agreements. However we anticipate that the volumes in day-to-day business will build up over time. We believe our pan-European clearing service will not only help companies do more business while reducing counter-party risk but can also help drive administration costs down."

Clearing of Legacy Deals

In order to make the transition to clearing easier, a special service for clearing of existing bilateral contracts for UK Gas, UK Power and German power will be offered to members during September and October 2002. Members will pay no more than 5% of the normal clearing fee on both the long and short sides of balanced positions and in many cases only 50% of the normal clearing fee for net long or short positions as measured at the end of this period.

Fredrik Voss explains: "By introducing a period of time during which we accept legacy deals for clearing at a discounted price we make it possible for our customers to convert from bilateral solutions for risk mitigation to a cleared environment, without being subject to both a clearing fee and the cost of existing bilateral solutions simultaneously." Furthermore, the clearing house has set up a special team which can aid members in identifying and defining portfolios eligible for clearing.