The Exchange Council of the European Energy Exchange (EEX) held its third meeting of 2017 in Paris. The meeting was chaired by Dr Michael Redanz (pictured), Managing Director of EWE Trading GmbH.
The Exchange Council discussed a wide range of topics, including the significant volume growth of the Phelix-DE Future since launch, as well as EEX’s implementation strategy ahead of the upcoming MiFID II deadline.
The Exchange Council was particularly encouraged that the Phelix-DE Future has quickly established itself as the new benchmark in European power. Since launching in April 2017, increased confidence from market participants has resulted in a significant shift of liquidity from the old Phelix-DE/AT into the new Phelix-DE contract, particularly in contracts which cover maturities following the split of the original bidding zone, which is currently planned for 1 October 2018. In the Cal-19 contract, more than 60% of the total volume is already traded in Phelix-DE Futures. The Exchange Council agreed that the Phelix-DE Future is the right product for the future which is designed to always reflect the price for the German price zone, regardless of the final outcome of regulatory decision. This in turn, will bring confidence back to the market and help to foster liquidity.
As a further sign of their collective confidence in the Phelix-DE product suite, the Exchange Council also discussed options regarding the potential phasing out of available maturities for the Phelix DE/AT contracts. Currently, open interest in Phelix-DE/AT Base Year Futures exists until the end of 2023, while for Phelix DE/AT Peak Year Futures, open interest exists until the end of 2020. In order to support the smooth transition from Phelix-DE/AT into the new national contracts, the Exchange Council discussed the option of not listing additional maturities for trading. Following a consultation period with the market, the Exchange Council will discuss further and potentially decide at its next meeting in December.
The Exchange Council also welcomed the update on EEX’s approach with regards to the upcoming reporting obligations under MiFID II. In order to reduce operational effort for clients, particularly for non-investment firms, EEX will generate pre-populated position and transaction reports which will then be made available to clients on a daily basis. Furthermore, the Council collectively agreed that as an exchange, EEX continues to assist and support clients throughout the MifID II implementation process, while at the same time calling for clarity and transparency from the national competent authorities.
The Exchange Council of EEX is an official body of the exchange under the German Exchange Act. It consists of a total of 24 members who expertly represent the various relevant interest groups and business circles. In addition to the trading participants who are represented by 19 elected members from five different voting groups, four representatives from associations and one representative of energy science belong to the Exchange Council. The tasks of the Exchange Council include the formulation of the rules and regulations of the exchange and their amendments. The Exchange Council is also tasked with the supervision of the Management Board of the Exchange and the appointment of the Head of the Market Surveillance.
