Dear trading participants,
As of 1 October 2018, the combined German/Austrian bidding zone in the power market will be divided into two national bidding zones (market areas). Currently the EEX derivatives market products for the German-Austrian market (Phelix-DE/AT Futures) are based on the day-ahead auction price in the German-Austrian Spot Market auction at EPEX SPOT. In line with the officially imposed split of the bidding zone, this EPEX Spot auction will be split into two national auctions as of 1 October 2018 (delivery date) (see also EPEX SPOT Customer Information of 19 June 2018).
Against this background and following comprehensive consultation with the participants to establish consensus, on 7 June 2017, the EEX Exchange Council adopted the resolution that from 1 October 2018 onwards, the Phelix DE/AT Index is to be determined as the weighted average of the day-ahead single hour prices for Germany and Austria. Weighting is to be effected until further notice on the basis of a 9 (Germany) : 1 (Austria) ratio (cf. EEX Customer Information of 7 June 2017).
The EEX markets are obliged to ensure an orderly and fair market and settlement procedure and, therefore, they have to ensure that interventions of public authoritiesin the framework conditions of power trading do not have a unilateral effect to the benefit or detriment of individual market participants. In line with this, positions in the Phelix DE/AT Non-MTF and the Phelix DE/AT OTF Futures must be settled in consistence with the decision of the EEX Exchange Council (9:1 weighting) as of 1 October 2018.
Please consider the following specific effects of the separation of the German/Austrian bidding zone on trading and the fulfilment of Power Derivatives Products on the EEX markets:
1. Underlyings of the Phelix Power Futures
The Phelix-DE Futures reference price is based on the day-ahead auction price established by EPEX SPOT for the market area comprising the balancing area operated by Amprion GmbH (AMP). Until 30 September 2018 (delivery date), this is the German/Austrian market area. From 1 October 2018 (delivery date) on, this is the German market area.
The Phelix-AT Futures reference price is based on the day-ahead auction price for the market area comprising the balancing zone operated by Austrian Power Grid AG (APG). Until 30 September 2018 (delivery date), this is the German/Austrian market area. From 1 October 2018 (delivery date) on, this is the Austrian market area.
Until 30 September 2018 (delivery date), the reference price of the Phelix DE/AT Futures is based on the day-ahead auction price established by EPEX SPOT for the German/Austrian market area. Once the split of the bidding zones takes effect, the Phelix DE/AT Futures will be settled on the basis of the individual hourly prices established by EPEX SPOT in the dayahead auctions for Germany (PDE) and Austria (PAT) in a 9:1 ratio.
2. Physical Fulfilment via EPEX SPOT
Even after 1 October 2018, trading participants admitted to EPEX SPOT can still participate in the EPEX day-ahead auctions with corresponding Phelix DE/AT Futures positions for the physical settlement of their Phelix DE/AT Futures positions. In this context, participation can be effected in the auction for the German power bidding zone – selectively in one of the four TSO zones – or comprehensively in the auction for the Austrian power bidding zone. Moreover, a distribution of the positions across the auctions for both power bidding zones is also possible in any proportion. In any case, the trading participants should consider that the financial settlement of the underlying Phelix DE/AT Futures will be effected in a ratio of 9 (Germany) : 1 (Austria) without any changes so that a different distribution of the positions across the auctions for both power bidding zones bears a basic risk which can lead to a financial loss.
After the split of the power bidding zones, the additional EEX service to automatically generated and dispatch the bidding forms to EPEX SPOT on behalf of trading participants will only be available for Phelix DE/AT positions as follows:
- for complete participation in selectively one of the two day-ahead auctions and
- only if EEX was commissioned to provide this service accordingly. To this end, market participants might have to adjust their agreements made so far (service order form) with EEX. EEX will publish an adjusted form to this end shortly.
In the case of the separation of the Phelix DE/AT Positions into auctions for both power bidding zones, the corresponding bidding forms have to be created separately and forwarded to EPEX SPOT; insofar the automatic generation and dispatch of the bidding form to EPEX SPOT will not be available.
3. No claim to effective delivery for Phelix DE/AT Non-MTF/OTF Futures
As a result of the officially imposed separation of the German/Austrian power bidding zone as of 1 October 2018, fundamentalcircumstances governing the Phelix DE/AT NonMTF/OTF futures with option for effective delivery have changed severely. This concern primarily the right with the option to demand effective delivery (delivery option). Upon exercising of the delivery option, a physical delivery in Germany and Austria in a 9 (Germany) : 1 (Austria) ratio cannot be executed operatively. Consequently, as was outlined in the EEX Customer Information and the ECC Clearing Circular of 4 December 2017, effective delivery of such positions in Phelix DE/AT Non-MTF/OTF Futures will no longer be possible. The claim to compensation is financial fulfilment on the basis of a 9 (Germany) : 1 (Austria) ratio (see section 1 above with regard to this). This applies to all participants that still have or open positions in respective Phelix DE/AT Non-MTF/OTF Futures contracts as of 1 October 2018 without exception.
The option of effecting physical delivery of Phelix DE/AT Non-MTF/OTF Futures positions in the desired bidding zone by entering a market order in the German and/or Austrian market areas at EPEX SPOT will still be available. The effective delivery of positions in products which are not affected by the split of the bidding zones will also still be possible without any changes (see section 2 above with regard to this).
4. Market data offering of EEX
The EEX and EPEX SPOT information products will be expanded by the auction prices for Phelix DE and Phelix AT established at EPEX SPOT. These will be published at the EPEX SPOT website. The synthetic auction prices for Phelix DE/AT are exclusively published via the EEX and EPEX SPOT info products.
Please do not hesitate to contact EEX Market Operations by phone +49 341 2156 222 if you have any further questions.
Yours sincerely,
EEX Market Operations
T +49 341 2156-222 trading@eex.com