On 23 February 2015 the Ministry of Finance issued a decision authorizing the start of trading commodity derivatives on the Financial Instruments Market (RIF) to be operated by the Polish Power Exchange (PolPX). According to the decision of the Minister of Finance, the new market should be opened within a year. Electricity futures will be the first instrument to be introduced to trading.
“Further development of the commodity market is one of the key elements of the WSE Group’s strategy for the coming years. We are glad that the work on the launch of the market in financial derivatives based on commodities is well advanced. This is a major success of our colleagues at PolPX but also a great challenge: to offer a product attractive also for the financial market. Market participants have been waiting for the introduction of the new instrument. It will undoubtedly be an important addition to the product offer of the Group, making our capital market more attractive and opening new options for participants,” said Paweł Tamborski, President of the WSE Management Board.
The Minister of Finance’s approval allows PolPX to open consultations with the market on the details of the new instruments. The last formal legal step required before trade in derivatives opens will be the approval of the terms of trade in a programme of electricity futures by the Polish Financial Supervision Authority.
“The launch of a financial market in PolPX is a natural step in the development of the exchange. We have developed the concept of the instrument, the terms of trading and listing. The Minister of Finance’s decision allows us to open discussions with market participants. The key challenge ahead is to improve liquidity and attract new market participants. In addition to players from the industry who are PolPX members, we will strive to attract Polish and international financial institutions,” said Ireneusz Łazor, President of the Management Board of the Polish Power Exchange.
The increase of turnover on its markets in the last few years ranks PolPX as one of the fastest growing exchanges in Europe and as the most dynamically growing CEE exchange. The rising liquidity of the exchange market in electricity operated by PolPX (186.8 TWh in 2014 in total, equivalent to 119.4 percent of national energy production and 117.7 percent of energy consumption) is the best proof of the confidence of market participants in the transparency of market prices and operating principles.
“The operating rules of the PolPX financial market will be similar to the existing rules of the futures market operated for many years now by the Warsaw Stock Exchange. We will first offer trade in electricity futures, followed by gas futures. The financial market development strategy not only unlocks the potential of PolPX to grow its turnover and attract new participants, it also enables our members to improve management of their buy and sell portfolios,” said Ireneusz Łazor.
Eligible to become members of the commodity-based financial market are energy companies licensed for generation, transmission, distribution or trade in electricity: existing PolPX members as well as Polish and international financial institutions. Authorisation to operate on the PolPX financial market (RIF) is subject to specific criteria of membership: filing a membership application with the PolPX financial market, obtaining the status of Exchange Member, obtaining membership status in WCCH (Warsaw Commodity Clearing House) or signing a clearing agreement with a WCCH member, and filing an application to be authorised for operation on the PolPX financial market.
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Warsaw Stock Exchange is the biggest securities exchange in Central and Eastern Europe and organises trading on one of the most dynamically growing capital markets in Europe. WSE operates a regulated market of shares and derivative instruments and the alternative stock market NewConnect for growing companies. WSE is developing Catalyst, a market for issuers of corporate and municipal bonds, as well as energy markets. Since 9 November 2010, WSE is a public company listed on Warsaw Stock Exchange. For more information visit http://www.gpw.pl
