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Use of Digital Confirmations Drives Efficiency and Transparency Once trades are submitted to eConfirm, Prebon's trade records will be digitally reconciled with those of its customers. In addition, Prebon's participation on eConfirm will permit substantial trade data to be contributed to the expanded indices and market data being launched by The 10x Group (10x).
"Partnering with Prebon is in perfect alignment with Intercontinental's objectives of increasing speed, accuracy and transparency in the OTC markets. We will provide Prebon's customers with timely trade confirmations that are the hallmark of our eConfirm platform," said Jeffrey Sprecher, Chairman and CEO of Intercontinental.
"Working closely with our customers and recognizing the significant efficiencies realized through digital connectivity, we sought out this relationship. Prebon is taking a leadership role in bringing together voice and electronic transactions to create a data pool that will benefit energy market participants and observers." said David Rutter, CEO of Prebon Energy. "Consistent with our desire to bring better benchmark pricing certainty to the energy markets, we decided to contribute our transaction data to the 10x indices. Equally as important, we believe our customers will benefit from the efficiency and accuracy of electronically verified trades when coupled with our consistently high level of tailored execution service. We will continue to set new standards for the broker community and provide our customers with the highest level of service."
10x Indices Expanded to Include eConfirm Transactions Intercontinental has licensed its aggregated trade data from the eConfirm platform to 10x for use in new market indices and forward curve pricing. 10x already has an exclusive license to use Intercontinental's trade data, which comprises a significant, verifiable repository of detailed trade information from which it currently publishes indices. With the addition of market data drawn from eConfirm and Prebon, 10x is able to provide expanded market transparency by including trades executed away from Intercontinental's digital platform. Currently, there are 28 participant companies on eConfirm, including some of the world's most active energy trading firms. To date, these participants have used eConfirm to confirm over 75,000 trades occurring at 49 different brokers and execution venues.
This broad participation on eConfirm has led to the development of a significant, unique trade database that captures important price data from execution venues outside of Intercontinental. By avoiding editorial price assessments and utilizing only verifiable, electronically captured trade data, market participants will have access to accurate, auditable price information in the timeliest and most consistent manner offered to date.
"Energy market participants should benefit from the addition of brokered market data to 10x. These indices mark a significant improvement to the legacy industry convention of relying on editorially gathered market data," Sprecher added. "This unambiguous method of collecting market data will allow the benchmark pricing mechanism to move closer to the trade execution venues, with digital confirmations removing subjectivity from the process. We believe that many trading firms have become uncomfortable with the prospect of circulating the entirety of their proprietary investment positions to journalists, who also have the important role of reporting on factors that influence the value of these investments."
"The 10x Group has worked closely with industry participants to develop and launch revolutionary new data products with greater market coverage. The depth and objectivity of these indices should substantially improve the integrity of the North American energy market benchmarks upon which billions of dollars of transactions rely upon each business day," said Martin Wadhwani, Managing Director of 10x. "Notably, the technology and controls employed in the new indices address the shortcomings of the traditional data collection method, and improve data integrity while lessening the demands on resources and personnel in providing data. Based on industry demand and our access to the single largest repository of OTC trade data, 10x is launching new indices and mark-to-market services in the coming weeks. These will be described in an upcoming white paper and methodology memorandum," he added.
"I am pleased that 10x, Prebon and other NEM members are coming together to solve one of the most important problems currently facing the industry," said Craig Goodman, President of the National Energy Marketers Association. He continued, "It has become obvious that the development and implementation of a generally accepted neutral, standardized, credible, transparent and auditable valuation tool is a key to solving the post-Enron liquidity crises. The greater the acceptance within the industry, the more likely it is that there will be a return of confidence within these markets. A credible index will also help standardize the marking of short and long-term markets, where historically there may not have been enough transactional data and liquidity to systematically verify a settlement price."
Sprecher added, "With this first voice broker agreement and with support building among industry participants, 10x is gaining significant momentum and can serve as a catalyst for bringing about much-needed change in OTC price reporting. It is my belief that our organizations can work together to build consensus within the broader industry to resolve price reporting issues facing the industry."
About Prebon Energy
As a leading global energy broker, Prebon Energy provides power marketers, utilities, producers, risk managers and institutions with a single
comprehensive source for price information and liquidity in a broad and expanding range of energy markets including, coal, emissions, natural gas,
oil and power. Prebon Energy is a part of The Prebon Yamane group of companies, providing brokerage services for financial and commercial
institutions worldwide in the foreign exchange, money market, derivative, securities, energy and emerging markets. The Prebon Yamane group of
companies comprise more than 1,600 staff located in 28 financial centers worldwide. Please visit www.prebon.com for more corporate and product
information.
About eConfirm
eConfirm is an efficient, electronic alternative to the manual trade confirmation process. Typically, an energy trade is not considered to be a
binding deal until confirmed by the back offices of trading counter parties. With the advent of digital trading in energy and metals products on
Intercontinental's electronic platform, many companies amended their bilateral trading agreements to consider electronic trades as firm upon trade
execution.
Intercontinental launched its eConfirm system to expand the digital confirmation of dealing conducted beyond its own platform, to include the ability to confirm trades conducted at 130 known OTC brokerage and trading arenas. The eConfirm system matches a participant's trade data to its counter party's data to execute confirmations and identify discrepancies in real time, contrasting to the manual method of confirming trades and reconciling voice broker invoices which may typically take days or weeks. eConfirm matched trades are considered to be legally binding under identical Intercontinental participant agreements that counter parties must execute in order to be active on the system. For more information, please visit www.eConfirm.com.
About 10x
The 10x Group (10x) is a market data services company with offices in Houston and London, and was established to address the commodity
industry's need for verifiable, transparent and timely market data. 10x operates on the premise that the richest source of pricing information is
derived from actual pricing and trade data used exclusively in its services. No judgmental editorial price assessments are used to compile content.
In conjunction with Intercontinental, 10x has established a stringent methodology for the collection of market data and the determination of its
inclusion in indices. 10x offers a range of data services including a real-time desktop providing OTC and futures content, wireless data services,
and daily market pricing through an exclusive licensing agreement with Intercontinental to distribute the platform's OTC market data. More
information is available at www.10xGroup.com.
About IntercontinentalExchange
IntercontinentalExchange (Intercontinental) operates global OTC and futures marketplaces for the trading of energy and metals products. Based in
Atlanta, with offices in Chicago, Houston, London, New York and Singapore, Intercontinental also owns the International Petroleum Exchange of
London (IPE), Europe's leading energy futures and options exchange.
The Intercontinental electronic platform is used by thousands of traders and trading operations professionals every business day to trade more than 600 listed commodity and derivative contract types around the world, including crude oil and refined products, natural gas, power, precious metals, weather derivatives and emissions allowances. Contract forms include physical delivery as well as financially settled swaps, spreads, differentials and options based on a variety of fixed and floating price indices. Intercontinental also supports the broader trading infrastructure with OTC cleared products and credit management, eConfirm, and market data services offered through The 10x Group.
The IPE provides regulated open outcry and electronic marketplaces where industry participants use futures and options to manage their price risk exposure in the physical energy market.
Products traded on the IPE include Brent Crude futures and options, Gas Oil futures and options, and Natural Gas futures.
For more information about Intercontinental, please visit the website at www.theice.com. The website for the International Petroleum Exchange can be found at www.ipe.uk.com.
