EEX Starts Training For Derivatives Market - Trading In Energy Derivatives To Start This Year

Following the successful launch of the spot market for electricity in early August this year, EEX is now getting ready to initiate derivatives trading in electricity: Trading in electricity futures at EEX is set to begin before the year is out. Underlying instruments for the derivatives are base-load and peak-load blocks that are traded on the spot market at EEX. As previously announced, the contracts will have terms of one to 18 months and will be cash settled.

The timetable calls for technical connection of the participants to the Eurex electronic trading system that will be used for derivatives trading by the end of September. Over 20 participants have ordered the necessary lines so far. Training for the market participants begins on September 25. The simulation for the derivatives market launch will then begin in mid-October, and will last for about three weeks, as in the case of the spot market. A launch date has yet to be determined together with the market participants.

"When the derivatives market is launched, we will be putting our integrated concept for the German electricity market into practice," said EEX Executive Board members Christian Geyer and Hans E. Schweickardt in Frankfurt on Monday. EEX will be the first German exchange to offer its participants spot trading and derivatives trading from a single source.

Some 25 participants are currently trading about 100,000 MWh on a weekly average in the EEX spot market. This corresponds to one percent of the weekly electricity consumption in Germany. In the medium term, EEX expects five percent of total German electricity consumption to be traded through the exchange, and in the long term, 20 percent.