Since the expiry of the IPE September Brent Crude futures contract the IPE has noted an encouraging expansion of trading activity in 21 day BFO contracts. Whilst this activity has largely been partials trading in the after market, there have also been several reported BFO spread and EFP trades of cargo size. Importantly, our key intra day assessors have determined that there is now sufficient activity to replace 15 day intra day assessments with the same on a 21 day BFO basis. There have been no 15 day Brent trades reported in the same period.
Accordingly, with immediate effect, the IPE will use 21 day BFO cargo trades, spreads and intra day assessments for the calculation of the Brent Index. The first contract expiry using the new basis will be the IPE October Brent expiry on 13 September 2002.
The IPE Brent Crude futures contract is a physically deliverable contract based on EFP delivery, with the option to cash settle against the IPE Brent Index. The existing arrangements for EFP delivery, which allow for grades other than Brent, remain unaffected by the change to the Index calculation.
During this review process, the IPE has received substantial, valuable input from its customers and members, reflecting the different views in the market. The IPE intends to continue this consultation process to ensure that the strong relationship between the underlying market and the IPE expiry mechanism is maintained.
About Intercontinental Exchange and IPE
Intercontinental Exchange is an internet-based electronic marketplace founded in March 2000 by leading U.S. and European financial institutions and energy and natural resource firms. Intercontinental's electronic trading system is used by traders each day of the business week to trade more than 600 listed commodity and derivative contract types around the world. Broadly, these include crude oil and refined products, natural gas, power, precious metals, weather derivatives, emissions allowances and coal. 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.
Based in Atlanta, (and with offices in New York, Houston, Chicago, London and Singapore), Intercontinental Exchange also owns the International Petroleum Exchange of London (IPE), an energy futures and options exchange. 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 Exchange, please visit the website at www.intcx.com. More information about IPE can be found at www.ipe.uk.com.
