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Exchange Council welcomes EEX’s Brexit preparations

The Exchange Council of the European Energy Exchange (EEX) has welcomed the news that EEX has been awarded Recognised Overseas Investment Exchange (ROIE) status for the United Kingdom by the Financial Conduct Authority (FCA). 

Effective since 21 February 2019, the ROIE status ensures that the exchange will be able to continue to operate in the UK regardless of the consequences of the upcoming Brexit. Furthermore, the Exchange Council welcomed the confirmation that EEX’s clearing house, European Commodity Clearing (ECC) is benefiting from the Temporary Recognition Regime by the Bank of England (BoE) which enables ECC to continue to offer clearing services in the UK for three years after Brexit should a No-Deal scenario materialise. In addition to the aforementioned Brexit preparations, EEX continues to closely accompany the Brexit contingency plans of its members, for example, on possible 3rd party requirements in the MiFID II context or consequences on the emissions trading system, like the loss of the registry account for UK customers.

The Exchange Council has also welcomed EEX’s plans to meet the pre-trade transparency requirements for pre-arranged trades that are registered at EEX and are not able to benefit from a waiver or exemption. Under Art 8 MiFIR, as interpreted by ESMA, trading venues are obliged to continuously publish current bid and offer prices for financial instruments, including pre-arranged trades. In order to meet these requirements as well as increase transparency on the latter, EEX has established a technical solution to ensure that the exchange is ready once final implementation details are confirmed by ESMA. For the legal implementation of this solution, the Exchange Council has adopted a number of changes to the EEX Trade Registration Rules. The Council also reaffirmed its general concerns regarding the pre-trade transparency requirements for trade registration and pointed out that these requirements still feel inadequate and counterproductive for commodity markets.

Finally, the Exchange Council discussed the gradual phase out of certain contracts in the Phelix DE/AT portfolio. Following the launch of Power Futures for the German (Phelix-DE) and Austrian (Phelix-AT) market areas in 2017, liquidity has shifted almost entirely from the old Phelix-DE/AT contracts to the new Phelix-DE and Phelix-AT products. Parallel to the shift in liquidity, the legacy open interest in the Phelix-DE/AT product portfolio is continously declining, with some maturities having already expired. In order to further promote the use of the new Phelix-DE and Phelix-AT offering, the Management Board of the Exchange will delist the Phelix-DE/AT product portfolio from trading insofar as no existing open interest is affected.

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.

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