NBP OTC-Clearing
OTC Clearing for the UK NBP Market
European Energy Exchange AG (EEX) will expand its product portfolio with OTC clearing for the British NBP market. Clearing and settlement of the OTC forward transactions are provided by European Commodity Clearing AG (ECC).
OTC Clearing on EEX and ECC enables:
- Automated trade flow:
OTC-cleared deals can be directly registered on EEX by your broker. - Cross-Margining savings:
The new Cross-Margining across all products and partner exchanges provides possibilities for comprehensive savings for the trading participants.
Transaction costs
For the UK NBP Market, the European Energy Exchange (EEX) has introduced a Fee Holiday until 28 February 2013. Until this date, participants can register NBP Gas Futures without having to pay fees for trade registration, clearing and delivery.
Cross-Margining savings in detail
The ECC Cross-Margining system generates a significantly higher savings potential for trading participants that use OTC clearing for the NBP market. This applies, in particular, to companies with diversified portfolios. In all cases, the entire portfolio is analysed by the SPAN® margining system and all margin credits are combined into a superior margin call. As a result, the margins to be furnished by participants that e.g. hold positions in EEX Derivatives Market products, natural gas derivatives products on APX-ENDEX or Powernext can decline significantly. The following table shows the typical margin savings.
Some typical margin savings
| ECC Product vs. EEX NBP | Typical savings | Minimum savings | Maximum savings |
| NCG & GASPOOL | 64 % | 45 % | 71 % |
| TTF | 65 % | 52 % | 71 % |
| Power (D/A) | 52 % | 31 % | 52 % |
| Emissions | 42 % | 32 % | 43 % |
The savings listed are illustrative examples. Moreover, ECC publishes information on Cross-Margining on its web site under the item “Risk Management”.
Automated trade flow
The OTC clearing offer for the NBP aims at simplifying the trading processes and reducing administrative work: The trade is submitted to EEX, registered there and forwarded to ECC for clearing. The trading organisation, or the broker receives a confirmation of the cleared transaction. This approach enables an automated trade flow. The administrative work required is minimised.
The process
Brokers can register OTC transactions directly with EEX. Initially, EEX will provide a trade registration service based on automated trade instructions. Instructions to EEX will be issued by the broker’s confirmation system. Once the trade has been registered on the trading platform, EEX will confirm it for clearing with the relevant trading organisations. In the near future, this process will be extended to include “straight-through processing” (STP) of transactions directly from the broker’s system or the trader’s front end application.
At a glance | |
| Contract description | Physically delivered NBP natural gas futures contract |
| Maturities | The respective next 6 months, 7 quarters and 6 seasons are available for clearing; week and year contracts available on request. |
| Trading hours | Contracts will be listed via the broker in accordance with their regular trading hours. |
| Lot size | One lot equal to 1,000 therms per day for the delivery period of the contract |
| Minimum contract size | 1 lot and multiples thereof |
| Tick size | 0.001 pence per therm |
| Cascading | Contracts cascade according to the ECC standard cascading processes. |
| Delivery | Delivery and/or procurement of natural gas with a constant output of 1,000 therms per day or 29.3071 MWh per day at the National Balancing Point (NBP natural gas futures). This is effected by ECC directly towards Xoserve / UK link. No counter nomination is necessary. Every trading organisation needs to complete the ECC form TP 19a or 19b as well as the “User Agent Appointment Notice”. |
Further Information | |
| Customer Information 2012-02-23 Fee Holiday for OTC Clearing at the UK NBP Market | download PDF (120 kB) |
| Product Flyer OTC-Clearing NBP Natural Gas Futures | download PDF (454 kB) |
