The Exchange Council of the European Energy Exchange (EEX) held its last meeting of the year, chaired by Dr. Bernhard Walter, Head of Market Design and Regulatory Affairs at EnBW AG, on
8 December 2022. The main topics were the expansion of EEX’s product portfolio on the Power and Gas Derivatives Markets, the harmonised settlement window and the current debate on a price cap for gas. New members of the Exchange Council are the representatives of Eni Global Energy Markets S.p.A., Philip Van De Wouwer, Flow Traders B.V., Erik-Jan Nieboer, and Roderick Timmer for Cross Options B.V.. All other current members remain on the Council.
The Exchange Council members discussed the current regulatory developments with a focus on the debate on a gas price cap for TTF Front Months products at the European level. Members of the Council generally supported measures to protect the industry and energy consumers from high prices. But it was made clear that the intended gas price cap would significantly interfere in the market functioning causing many fundamental problems: Restricting a free and fundamentally driven price formation, a price cap on natural gas would not lower prices, but simply undermine TTF Derivatives as a tool for risk management - particularly for market participants who cannot trade OTC, as trading would be moved away from established processes and venues. “Limiting the wholesale price level would pose a serious threat to security supply and could create significant uncertainties in the market. It will restrict the possibility of market participants to manage their positions leaving them with increased risks. A gas price cap will jeopardize confidence in the market functioning”, says Dr. Bernhard Walter, Chairman of the Exchange Council.
The Management Board of the Exchange outlined plans to further extend the EEX product portfolio in response to market demand. The exchange plans to add Peakload Futures to the Swiss Power Futures portfolio which will include Day, Weekend, Week, Month, Quarter and Year Futures. In cooperation with the Croatian Power Exchange Ltd. (CROPEX), EEX will introduce Power Derivatives for the Croatian market (Baseload and Peakload Futures, comprising of weekly, monthly, quarterly and yearly expiries), strengthening its offering for the CSEE region. To further strengthen EEX’s position on the Japanese power market, the exchange will add short-term products for the Trade Registration of Power Futures in the Tokyo area. In addition to add Day and Weekend Futures to the product portfolio, EEX will extend the range of tradeable Month Futures from 6 to 9 expiries.
Furthermore, EEX will extend the range of financially settled gas futures to the UK market by listing the ESGI Gas Future for delivery on the British NBP hub. So far, EGSI Gas Futures have been available for the German THE, the Dutch TTF and the Austrian CEGH hub, complementing the existing physically settled futures. The Exchange Council approved the product roadmap and welcomed the product plans which will further strengthen EEX’s position in its core markets. EEX plans to launch the products in the first half of 2023 and will inform their trading participants in due time ahead of the introduction.
The Exchange Council was also informed on EEX’s harmonised settlement price window which has been in effect since 5 December 2022. The time window for determining the settlement prices for the Power, Natural Gas and Emissions Futures is now aligned and has been set at 5:00 p.m. to 5:15 p.m. The Exchange Council expressively welcomed the recent adjustments as the harmonised settlement price window will reduce the price risks for market participants at the end of a trading day, particularly in volatile market conditions.
The Exchange Council of EEX is an official body of the exchange under the German Exchange Act. This committee consists of up to 24 members who are elected from among the trading participants in four voting groups in order to represent the various interests and businesses appropriately. The tasks of the Exchange Council include the decision on the rules and regulations of the exchange and their amendments. The Exchange Council is also responsible for the supervision of the Management Board of the Exchange and the appointment of the Head of the Market Surveillance. More information: www.eex.com
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