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On 4 December 2015, the last meeting of the Exchange Council of the European Energy Exchange (EEX) 2015 was held in Vienna, chaired by Peter Heydecker, Vitol SA. The main subjects discussed at the meeting included the planned Wind Power Future, new maturities for five market areas on the Power Derivatives Market as well as regulatory developments.
At the meeting, EEX presented the contract specifications for a Wind Power Future. As well as the growing volume of fluctuating wind power within the power grid, the number of companies that are exposed to an increasing volume risk as a result of the expansion of the wind energy portfolio has also increased. This new product will enable the trading participants to hedge wind power production on the basis of an index reflecting the actual feed-in of wind power. EEX will offer this product, whose maturities will cover weeks, months, quarters and years, for the German-Austrian market area. The Exchange Council welcomed the introduction of this product and approved the inclusion of its contract specifications in the rules and regulations of the exchange. The Wind Power Future will be introduced in the spring of 2016 and is set to become the second product launched by EEX from their “energy turnaround products” division. In September 2015, EEX launched exchange trading in Cap Futures, a derivatives contract referencing the German Intraday Market of EPEX SPOT.
EEX also intends to continue the expansion of their existing product offering on the Power Derivatives Market with short-term maturities. For example, day and weekend contracts for base-load deliveries of power in the French and Italian market areas have been tradable since February 2015. As a result of the positive volume development observed over the past months and the lasting trend towards shorter-term trading, peak-load day and weekend maturities will be introduced for both market areas during the first quarter of 2016, in addition. At the same time, EEX is planning to introduce week futures for base-load deliveries of power also in the Dutch and Swiss market areas. These new products are to supplement the existing product portfolio of month, quarter and year futures in these market areas. The Exchange Council approved these product expansions which will contribute to increasing the liquidity in the “new” regions and attracting new trading participants.
In addition, the Exchange Council discussed the complaint which the Austrian energy regulator E-Control filed with the European Agency for the Cooperation of Energy Regulators (ACER) and the action brought before the European Court. These measures are taken to counter the ACER proposal regarding a split-up of the German-Austrian power price zone. The Exchange Council, which has repeatedly warned against such a split-up of the price zone, expressly welcomed the intentions behind the complaint and the action – i.e. maintaining the joint pricing zone and reaching clarity on this. However, in the discussion, express reference was made to the fact that the preservation of a German-Austrian price zone should not come at the cost of a split-up of the price zone within Germany as the negative consequences of such a move would be the same. The European Derivatives Market and, in particular, the high liquidity in the German-Austrian price zone would be directly jeopardised by any split. The Exchange Council called upon all parties involved in the discussion to jointly develop professional solutions and, in particular, to consider the requirements of the Derivatives Market in the debate. To this end, a “round table” could be set up which should also include the trading and exchange side, in addition to the regulators and transmission system operators concerned.
Finally, the Exchange Council discussed the effects of the MiFID/MiFIR financial market regulation on the energy market. It welcomed the postponement of the application of MiFID/MiFIR to January 2018 by one year as proposed by the European Commission and the European Securities and Markets Authority (ESMA). This will give the authorities and market participants more time to get clarity on the specific design of the MiFID legislation and to adapt to the new requirements. Alongside general aspects regarding the development of the energy markets under MiFID legislation, the Exchange Council in particular discussed the ancillary activity exemption for commodity derivatives trading. For example, if the exemption is not designed appropriately, this can have major negative effects on the liquidity on the wholesale market and, as a result, on energy costs overall. Such a development would completely contradict the aim of an efficient and integrated energy market explained the Exchange Council.
The Exchange Council of EEX is an official body of the exchange under the German Exchange Act. It consists of a total of 24 members who expertly represent the various relevant interest groups and business circles. In addition to the trading participants who are represented by 19 elected members from five different voting groups, four representatives from associations and one representative of energy science belong to the Exchange Council. The tasks of the Exchange Council include the formulation 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.
