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At its meeting on 5 June 2013, the EEX Exchange Council dealt with amendments of the rules and regulations which became necessary as a result of current clearing regulation and further legal amendments. Furthermore, it also dealt with the introduction of new products on the power market. The meeting of the Exchange Council, which was chaired by Peter Heydecker, Head of Origination Gas & Power at Vitol SA, took place in Leipzig.
The EU regulation EMIR (European Market Infrastructure Regulation) requires all standardised over-the-counter derivatives contracts to be submitted to mandatory clearing if the total for which “physical” trading participants (non-financial counterparts) account in these, exceeds a threshold value of EUR 3 billion. EEX has fully revised its conditions for clearing of over-the-counter transactions through the European Commodity Clearing (ECC) to this end and published these in a new version entitled “Trade Registration Rules”.
As Dr. Wolfgang von Rintelen, Head of the Legal Department, explained, the transactions voluntarily registered for clearing are established through the conclusion of a transaction on EEX and, as a result, they correspond to an exchange transaction. In this respect, they do not form OTC contracts within the context of EMIR and should not be considered in the calculation of the EMIR threshold for mandatory clearing. The Exchange Council approved the amendment of the rules and regulations. As Peter Reitz, CEO of EEX, added, EEX and ECC are working to introduce further products for registration on the exchange and to gradually establish a pan-European clearing offering for market participants.
Furthermore, the Management Board of the Exchange presented the specifications for a product enabling traders to hedge even more flexibly against fluctuating prices on the Power Spot Market. This is due to the reinforced feed-in of power from renewable energies and, in particular, from solar generation. If there is a high supply of solar power, a dampening effect on prices around noon and in the early hours of the afternoon can be observed. As a result, EEX plans to supplement the Phelix Futures with products which take account of this change in market conditions throughout the course of 2013.
The so-called “Phelix Sun Peak Futures” will cover the block of hours from 10:00 to 16:00. The Exchange Council approved the introduction of these products since the reduced peak load time offers the participants a hedging product to counter the influence of risk on the price and generation of solar power.
Furthermore, the Exchange Council discussed adjustments to the rules and regulations which became necessary as a result of the high-frequency trading act which took effect on 15 May 2013. Trading participants wishing to trade in the high-frequency segment will need an approval by the Management Board of the Exchange and may only use technical systems which do not pose any risk for exchange trading on EEX. The Exchange Council emphasised that the stability of trading takes the highest priority if algorithmic systems are applied, especially when fast market situations occur. Nonetheless, it is recognised and highly desirable that participants from the financial sector take part in trading on EEX with their market view, thus providing liquidity for the energy markets.
Finally, the Management Board of the Exchange informed the participants in the meeting of EEX’s plans to retroactively spin-off the Spot and Derivatives Market for Emission Allowances into an independent company as of 1 January 2013. As a wholly owned subsidiary, this company will have the corporate name, Global Environmental Exchange GmbH (GEEX). At the annual general meeting on 6 June 2013, the shareholders of EEX approved and supported this step. “Collaborations with other trading platforms are much easier to implement in an independent company”, explains Peter Reitz. “Thanks to the positive development of this market segment – in 2012, the trading volume on EEX was approximately 250 million tonnes of CO2 – the time is now right for us to implement in emissions trading, what we have already successfully carried out in the field of power and natural gas trading.”
The Exchange Council of EEX is an official body of the exchange under the German Exchange Act. It consists of in total, 24 members who adequately represent the various interest groups and business circles. In addition to the trading participants, with 19 elected members from five different voting groups, four representatives from associations and one investors’ representative are members. The tasks of the Exchange Council include, in particular, the adoption of the rules and regulations of the exchange and their amendments. The Exchange Council is also tasked with the supervision of the Management Board of the Exchange and the appointment of the head of the Market Surveillance.
