Global Power Derivatives Newsletter | May 2020
Washington DC., Leipzig, Tokyo
On the 18th May, EEX will extend its global power product suite by offering Trade Registration services for the Japanese Power Derivatives market. The Go-Live date was announced in January as part of the EEX Group Japan Power Conference in Tokyo which was attended by more than 200 industry stakeholders from Japan and around the globe.
Since the announcement in January, there have also been a number of further developments in our Japan story. In April, EEX received the necessary approvals from both the German and European regulators (BaFin and ESMA) regarding the launch of our clearing services for Japan. Furthermore, we have also announced that EEX will not charge trading and clearing fees for the registration of Japanese Power contracts until 31st October 2020. Given the current circumstances and the special challenges that we are all facing, we feel this will go some way in helping to lower entry barriers for customers and help grow initial liquidity.
Finally, to ensure that you are kept fully up to date, we have recorded a dedicated Japan Power podcast. In the podcast, Steffen Riediger and Steffen Koehler give a comprehensive overview of the entire Japan Power project and outline their ambitions for this very important market.
In 2019, EEX Group continued to expand its global power presence, achieving major increases in both the European and American power markets. As a result, EEX Group reconfirmed its position as the number one trading platform in the world for the third consecutive year. 2020 has also got off to a very positive start with significant year-on-year volume increases achieved in Europe (1,781 TWh, +31%) and North-America (685 TWh, +15%) from January to April.
With the imminent launch of clearing services for the Japanese power market, in addition to offering EEX’s most liquid power contracts to the Asian trading community, EEX Group’s power portfolio will very soon be active in the three major time zones.
Further in-depth information on the development of EEX Group’s global power market can be found in our 2019 Annual Report which has just been published.
Since the migration of Power Exchange Central Europe (PXE) products onto the EEX platform in 2017, liquidity in cleared power futures in the Central-South-Eastern-Europe region has almost doubled every year since then. In 2019, EEX achieved a record trading volume of 185 TWh in this region, up from 102 TWh in 2018. This very positive trend in volume growth was predominantly driven by the strong development of the Hungarian market, which is now the 4th largest power market in terms of traded volume on EEX’s European power derivatives platform, behind Germany, Italy and France.
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Power in the US, unlike Europe where markets are national, is priced around regional hubs, zones and nodes, meaning utilities that are active in a number of markets are subject to basis risk if power prices move in different directions at different locations. Nodal Exchange, which joined EEX Group in 2017, has been helping participants address this risk since its launch just over a decade ago. Nodal Exchange offers the world’s largest set of electrical power locational (nodal) futures contracts and achieved a record year of trading and a record 45% market share of power futures open interest in 2019 - and, the growth continues…
“In Q1 2020, Nodal set a new quarterly trading record in power futures with 579 million MWh, and March 2020 was Nodal Exchange’s 20th consecutive month of record calendar month trading volume,” said Paul Cusenza, Chairman and CEO of Nodal Exchange. “We are very proud of our growth and success, and as 2020 progresses, we hope to continue to grow in power and expand our product portfolio in order to continue to best meet the needs of the markets we serve.”
From 1st July 2020, all market participants in wholesale power and gas trading must report their inside information according to REMIT Regulation (EU) No. 1227/2011 to ACER via an Inside Information Platform – this includes market participants without plants or with plants that generate less than 100 MW.
With the EEX Inside Information Messenger, you can effectively disclose your inside information via the EEX Transparency Platform. The EEX Transparency Platform is acknowledged by ACER as an official Inside Information Platform.
If you register by 31st May 2020, reporting of inside information is free of charge until 31st December 2020.