N2EX Clearing and Operations to transfer from NASDAQ OMX to Nord Pool Spot

4 March 2014

The partners in the UK power market N2EX - NASDAQ OMX and Nord Pool Spot - have agreed on the transfer of the short-term physical market clearing and operations portion of the N2EX business. The transaction, which is expected to be completed by October 1, 2014, will give Nord Pool Spot sole ownership of N2EX, the UK’s leading power market by volume, while NASDAQ OMX will remain the operator of the financial power market

N2EX was formed in January 2010 in response to a Power Trading Forum tender aiming to establish a liquid and transparent UK power market providing a robust index price for power. Since that time, N2EX has been jointly operated by NASDAQ OMX Stockholm AB, providing clearing services and Nord Pool Spot operating the physical markets. In its four years of operation, N2EX has grown both in terms of membership and in volume of power traded on its auction – achieving trading volumes approaching 50% of Great Britain day-ahead consumption.

In pursuit of its long term ambition to provide consolidated intraday and day-ahead trading opportunities across multiple markets, Nord Pool Spot will take over N2EX clearing responsibilities for the short-term physical market from NASDAQ OMX.  The transfer will effectively replicate in the UK the successful Nordic wholesale power market model, with NASDAQ OMX operating the derivatives markets and Nord Pool Spot the short-term physical market.

NASDAQ OMX will continue to develop the financial power market, where members are able to trade UK futures contracts indexed on the robust N2EX day-ahead auction price.

“NASDAQ OMX Commodities   has achieved its objectives with N2EX,” Bjørn Sibbern, Head of NASDAQ OMX Commodities, said. “The day-ahead auction has established itself as the benchmark for UK day-ahead electricity, our technology platforms are proven and the North Western Europe Project has been successfully delivered.

“NASDAQ OMX Commodities will continue its focus on growing its presence in European derivatives, and on UK financial futures contracts which settle versus the N2EX day-ahead auction price. We congratulate Nord Pool Spot on its purchase and wish them well in continuing the success of the N2EX platform.”

Confirming the company’s takeover of N2EX, Mikael Lundin, CEO of Nord Pool Spot, added: “Through our experience in pioneering integrated power markets in the Nordic and Baltic regions, Nord Pool Spot has long understood the significance of the recent North Western European market coupling and the benefits it will bring to N2EX market participants. We are now able to concentrate all our efforts on ensuring our UK market members reap those benefits.

“By taking over N2EX clearing services we will be able to broaden our service offering to the UK market, provide economies of scale, consolidate IT infrastructure and collateral requirements and continue to lower barriers to entry, while continuing to develop a market with greater depth.”

As part of its acquisition of N2EX, Nord Pool Spot will develop a new and improved intraday platform, designed to be harmonized with the European cross border intraday developments. To facilitate this, the current N2EX prompt and intraday markets will be suspended from 1 April 2014, pending the launch of the new intraday market. 

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