Exchange Council confirms introduction of financial gas futures and spark spreads at EEX
EEX is to introduce financially settled natural gas futures in the first quarter of 2021. The new futures will be offered for the Dutch (TTF), the Austrian (CEGH) and the German (NCG) market areas.
The range of maturities for the new contracts will cover the full curve and also include Day, Weekend and Week contracts in addition to the monthly, quarterly, seasonal and annual expiries. The financial futures will be settled against EEX’s European Gas Spot Index (EGSI).
This launch will not only extend the range of trading opportunities for the customers, it will also enable EEX to launch spark spread contracts, so that trading participants can trade the price spread between the power and gas derivatives market which is an important addition to further strengthen liquidity. The Exchange Council welcomed the product extension and approved the necessary changes to EEX’s rules and regulations.
The Exchange Council also discussed an extension of EEX’s Trade Registration Service, which will allow two brokers to register the respective buy- or sell-side of a transaction individually. This so-called co-brokerage solution ensures that Trade Registration on EEX between UK and EU trading participants will remain possible without any regulatory cross-border limitations, even in the event of a no-deal Brexit scenario. In addition, the possibility to register co-brokered transactions will support the further growth of EEX’s client base outside Europe as brokers will be able to easier connect trading interest from different geographic regions. Alongside other measures EEX and its clearing house European Commodity Clearing (ECC) already have taken, Co-Brokerage is another piece of service of EEX Group to provide security in these uncertain times of the upcoming Brexit.
Furthermore, the Management Board of the Exchange informed the Exchange Council members on the newly established “EEX Hydrogen Working Group”. Hydrogen provides the possibility to decarbonise sectors where the use of electric energy is not the most efficient decarbonisation option. It can be stored and transported in the majority of existing gas pipelines which are likely to become otherwise redundant as the energy transition progresses. The EU commission as well as many European countries have published dedicated hydrogen strategies with the aim to establish liquid and clean hydrogen markets over the next ten years. While the market itself does not yet exist, regulatory conditions and market design for hydrogen are now being established.
In a workshop held in November, EEX gathered over 120 participants from the energy sector with the aim of discussing the potential hydrogen market design with the long-term goal to develop trading products, be it as a physical commodity or guarantee of origin. The Exchange Council welcomed this initiative which testifies to EEX’s role to develop new markets from the outset in close dialogue with market participants.