Significant market interest evident from new liquidity providers, brokers and market makers
The German Power Initiative, aimed at making the German power market more transparent, liquid and cost effective, continues to receive strong market support. To date, 10 liquidity providers, 3 brokers and 1 market maker have signed on, since NASDAQ OMX Commodities invited members to participate in March. The German Power initiative is part of NASDAQ OMX’s overall commodities strategy to leverage its best in class technology platform and expand its presence in the three largest power markets in Europe.
With the increased focus on transparency by new regulations, exchange trading and clearing represents a great opportunity for NASDAQ OMX Commodities in Europe. With this initiative, NASDAQ OMX plans to build on its proven success in the Nordic power market and the N2EX offering in the UK.
Namesh Hansjee, Head of EMEA Energy and Global Coal/Freight Trading at BofA Merrill Lynch, said, “We welcome NASDAQ OMX's offering of cost effective cleared products for the German power market, and we are pleased to support this initiative as a liquidity provider.”
Mr. Raphael Brun, Director of European Power at Citigroup said,”We believe the market and our customers will benefit from higher levels of competition. The NASDAQ OMX initiative responds to a strong market demand for a transparent, cross-market approach in a low fee environment”.
In addition to BofA Merrill Lynch and Citigroup, the liquidity providers supporting the German Power Initiative are EDF Trading, JP Morgan, Axpo Nordic, Mercuria Energy Trading, Statkraft Energi, Dong Naturgas, Einar Aas, and one player that wishes to remain anonymous.
Bjørn Sibbern, Head of NASDAQ OMX Commodities, said, “NASDAQ OMX continues to expand its presence in Europe and we are very pleased to offer a suite of products for improving liquidity and transparency in the German power market. At this time, we are particularly pleased to welcome several new liquidity providers, brokers and market makers that will greatly contribute to develop a more liquid and efficient German power derivatives market.”
NASDAQ OMX’s German product offering now includes German Power Futures and Forward contracts and European Style Options with monthly, quarterly and yearly expiration for German Power Futures and Forwards. The extended forward curve covers six monthly, 8-11 quarterly and five yearly contracts, in addition to the daily and weekly futures contracts.
Electricity Price Area Differential Contracts (CfDs) will be offered this June and will enable traders from Continental European power markets to hedge the basis risk between the German system price and neighbouring price areas (FR, NL, CZ and BE) by trading the relevant CfD.