The Exchange Council of the European Energy Exchange (EEX) has approved an adjustment of the cap of the EEX Cap Future contract, as well as the launch of the Floor Future.
It has also approved other decisions regarding Straight-Through Processing (STP) for Spot Markets and the introduction of additional maturities in Power Options.
The Exchange Council discussed the reasoning behind the planned adjustment of the cap of the EEX Cap Future contract. When EEX introduced the contract in September 2014 as a means to hedge against peak prices, the cap was set to include the upper 2 per cent of observed prices from the previous year (2013) i.e. 60 EUR/MWh.
However, as prices have continuously fallen since then, both on the day-ahead and in the intraday, after consultation with market participants it was decided to adjust the cap from 60 EUR/MWh to 40 EUR/MWh from November 2016 onwards.
Michael Redanzs, chairman, says: “We highly welcome this step as it reflects the close cooperation with market participants and the EEX’s flexibility to further develop their offering depending on market conditions.”
Furthermore, the Exchange Council approved the introduction of Floor Futures for the intraday market. Unlike the Cap Future, the Floor Future allows trading participants to hedge against market price risk in the lower priced segment of the German Intraday market, and in particular against negative prices. After consultation with market participants, the Exchange Council agreed to set the floor to 10 EUR/MWh.
The Exchange Council also agreed to extend straight-through processing (STP) functionality to spot market transactions. Currently, straight-through processing via brokers is only available for derivatives market transactions. However, due to the increasing volume of registered trades on the spot and derivatives markets, the option to register trades via STP will be extended to spot market transactions also, resulting in improved efficiencies for market participants of EEX Group as trading entities won’t need to process each individual trade concluded off-exchange manually.
In addition, the Exchange Council also agreed to the extension of tradable maturities of month options for the power market. Since 2015, EEX has gradually expanded its product suite for power options in close collaboration with its client base. As a result of customer feedback, the maximum number of tradable maturities for monthly options on power futures will be extended from 5 to 9 months. This will bring the option maturities in line with the Phelix Futures, where also the next 9 months are tradable. The Exchange council agreed that the extension from 5 to 9 tradable maturities should be implemented within the fourth quarter of 2016.
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.