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EEX Gas & Sustainability Markets Newsletter | Oct 2022 |  |
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| | | Dear customers, partners and friends of EEX,
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The Russia-Ukraine conflict is having an immense impact across the globe. The uncertain supply of natural gas in Europe affects gas and electricity prices for both businesses and private consumers. This emphasises the importance of our mission as an energy exchange more than ever: to ensure fair and orderly markets for the determination of unbiased commodity prices.
Exchange trading plays a vital role in the security and transparency of supply. Today, more than 90% of all traded gas volumes for the current day, next day and weekends are traded on EEX's open screen orderbooks in Europe's largest and most liquid natural gas markets like TTF, THE and CEGH.
Our Natural Gas derivatives markets are spread across 10 geographical market locations, making it possible to trade gas across Europe with execution on the exchange and optimised cross-margining simultaneously. This is especially significant during times of high prices and high volatility.
To underline the importance, we established a dedicated EEX webpage to cover your concerns and questions. Here, we summarise key information on the volatile price situation, potential emergency measures for major disruptions to gas delivery, as well as a FAQs on a potential derivatives market suspension.
In general, and particularly in times like these, it is crucial for us to stay in close contact with you, to continue building markets together in line with the changing landscape. In today’s newsletter, we shed some light on a few of the recent EEX initiatives for gas and sustainability markets.
As always, we are at your disposal for open discussion and feedback. Enjoy the newsletter!
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| Kind regards,
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Steffen Köhler
| COO | EEX
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| | New price index for next-day delivery | |
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EEX AG’s Natural Gas indices are expanding. EEX is launching a new index, Next Day Index (NDI), which will bridge the price signals during the weekend – making sure you always have the most recent price indicator for next-day delivery. EEX is launching this index to meet market demand for a high-quality price reference also over the weekend. This is especially important for physical suppliers, who need reliable prices when grid operators announce the firm delivery volumes.
With its NDI, EEX delivers a trustworthy, transparent, and timely price reference for next-day delivery, as this index is based on exchange transactions on EEX’s wholesale markets for physical delivery. It, therefore, provides a reliable and transparent reference price for next-day delivery.
Because the NDI is based on on-screen exchange trades, the index is 100% transparent. On top of that, it is based on Europe’s most liquid spot markets. EEX’s TTF spot trading accounts for 97% of the total TTF day-ahead market volume, which is Europe’s leading natural gas market.
The NDI is calculated daily as a volume-weighted average price based on all transactions of the day from 8.00 to 18:00, for the next day, also on Saturday for Sunday, and on Sunday for Monday.
Because of the high liquidity of the EEX markets and the robust methodology used, EEX Natural Gas indices provide the most reliable price signals in Europe.
You can find the detailed methodology in our Index Description.
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| EEX facilitates spread trading with CEGH VTP | |
From 1st October 2022, EEX has expanded its product suite for spread trading with the Austrian hub CEGH VTP. EEX is launching two new orderbooks for within-day contracts connected with this market area, one for the spread CEGH VTP/TTF and one for the spread CEGH/THE. This launch coincides with Austria’s announcement of an update of their gas balancing system. In this context, EEX adapts the tradeability of the within-day contract for Austrian gas delivery. The new technical setup of EEX CEGH VTP within-day trading allows for these new spreads with the Dutch market area TTF and with the German market area THE.
Trades on these two locational spreads enjoy the same level of security of execution as all other EEX gas products. With the dedicated spread orderbooks, matching of orders across delivery areas happens simultaneously. This also results in additional prices in the three outright orderbooks of TTF, THE, and CEGH VTP, due to the automatic generation of implied prices. EEX is building markets here by facilitating more efficient trading
You can find all the technical changes and more information on the new balancing system in our Customer Information.
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| | EEX - the natural partner to operate hydrogen registries in EU | |
Designing an EU-wide registry for hydrogen guarantees of origin is one of the major challenges over the coming years. And EEX is getting ready for it. EEX already plays an important role in the operation of registries in Europe, with various references. Among others, EEX operates, for example, the registry for CO2 emission rights, energy efficiency certificates, guarantees of origin on Power, etc. Some of those already have a European dimension.
It is therefore quite natural that EU gas TSOs have touched base with EEX when it came to considering and designing solutions for guaranties of origin certificates for hydrogen. GRTgaz, came first, and, together with EEX, is currently designing the French system. Since then EEX has been in contact with different gas TSOs.
Gas TSOs are indeed the natural candidates to operate the physical part of such registries, while EEX, on its side, is the perfect partner to operate the contractual aspects of such services. EEX has been a long established and trusted partner of all EU gas TSOs for the past 15 years. EEX is a neutral player, being both independent and regulated by NRAs. EEX already has a very large member base with 300+ companies members from its energy markets and 3000+ companies on its registry activities. And through its European dimension and its experience in registry services, EEX is the perfect fit for facilitating interconnections between hydrogen registries in different EU countries. As a regulated exchange, EEX fulfils all preconditions for providing a stable, secure, and reliable infrastructure for registries. EEX indeed provides the best possible environment in terms of IT operability, data security and management of anonymity.
Even more importantly, in the long run, EEX can facilitate the organisation of an EU H2 market. And, thanks to its central clearing house ECC, EEX can also provide state of the art financial security and clearing solutions which secure the fulfilment of transactions. On the natural gas/biogas markets, this positioning of EEX is obvious. On the H2 market, this is still very much in prospect. Yet, EEX already has great support from market participants and has attained considerable approval and satisfaction - with its Hydrix initiative especially.
EEX intends indeed to play a leading role in the hydrogen market. Since November 2020 EEX has been working with more than 120 market participants from 6 different countries to create the Hydrogen market of tomorrow. In this context, EEX is establishing a hydrogen-index based on price-assessments, together with experts. The indices transparently reflect the market and will be subject to further developments over the coming years. The index will be the first publicly traded index that tracks hydrogen as a commodity.
Helping gas TSOs in building adequate registries for H2 guarantees of origin is the natural next step. EEX has a great interest in this topic and is committed to further developing its services for the hydrogen market, together with its customers and supporting member states in this process.
Read more about EEX Group’s commitment to support the creation of a European hydrogen economy.
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| Energy ambitions – France is expanding the Energy Savings Certificates scheme | |
The French Ministry of Ministry of Ecological Transition will soon publish a decree increasing the energy saving obligations to 25%. This has a direct impact on French gas suppliers in terms of the energy savings to be achieved because these actors will have to subsidise 25% more energy-saving operations - which represents a major cost.
The Energy Savings Certificates (ESC) scheme, also known as Certificats d’Economies d’Energie (CEE), represents the main tool of the French energy demand management policy. This system is based on an obligation to make energy savings over a period of time imposed by the public authorities on energy providers (electricity, gas, heating and cooling, domestic fuel, automotive fuels), known as "obligated parties", whose energy sales exceed thresholds set by regulation.
Since 2018, EEX has been appointed by the French state to be the registry operator for around 3,000 users. In its daily mission, EEX has to run the operations, such as transfers of ESC and issuances, and provide the technical maintenance on the registry. EEX will continue to run it from 2022 to 2025, since EEX recently won the tender of the French Ministry.
Read more about EEX’s operations of the Energy Savings Certificate mechanism.
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| | Fee waiver on EGSI Financial Futures extended until end of 2022 | |
EEX has prolonged its “Initiator Fee Waiver” for all EGSI financial futures products until 31st December 2022. As a result, traders set up for natural gas financial futures are exempt from trading fees for these products.
In June last year, EEX has expanded its product range on the derivatives market with new financial gas futures. These new contracts are listed on the Dutch (TTF), Austrian (CEGH) and German (THE) market areas and are cash-settled against the European Gas Spot Index (EGSI), the most robust and transparent pricing reference in the European gas market.
EEX also enables its members to trade the price difference between the new financial gas futures and existing highly liquid Financial Power Futures in dedicated Spark Spreads orderbooks with execution guarantees.
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Lacima – Analytics solutions for the gas market
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With the recent unprecedented volatility in the European power and gas markets the ability to price structured power and gas trades, to take advantage of the volatility and the ability to manage the risk for portfolios of energy trades is front and centre in the minds of all market participants. As part of EEX group, Lacima has a range of solutions to address these market needs.
The Lacima Trader suite of Excel add-ins enables front office traders to conduct bespoke deal valuation, analysis, structuring, simulation and reporting to take advantage of the volatility in European power and gas markets. These tools are designed to value a wide range of power and gas structures, yielding meaningful insights with the ability to drill down into detailed outputs and value drivers – allowing the user to analyse, understand, and explain the sources of value.
The Lacima Analytics Value-at-Risk (VaR) offering gives full visibility into the sources and drivers of value and risk in your portfolio. Users can explain, with confidence, day-on-day changes of the calculated VaR and are able to better understand changes in the risk profile driven by incremental potential trades. In addition, comprehensive stress testing and scenario analysis functionality adds to the arsenal of the risk manager to better communicate risk exposures to senior management.
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| Visit Lacima’s website
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FOR ALL VIDEO CONTENT - MAKE SURE TO CHECK OUT EEX TV
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Touchpoint – EEX Group’s new OTC solution
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| EEX has recently launched a new trade registration platform for brokers, clearing members and trading participants. The feature rich, but intuitive system provides a full range of trade registration and administration services and tools, allowing users to control all parts of the OTC trade workflow. For the first time ever, Touchpoint will bring together all EEX asset classes in a single, intuitive, and easy-to-use platform.
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EEX Group Excellence Award
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| This year, for the twelfth time, EEX Group is hosting the EEX Group Excellence Award for outstanding research papers that deal with current political, regulatory, technical, or economic questions in the fields of energy and agricultural products as well as exchange trading and sustainability. The winners are awarded a cash prize and a complementary exchange trader course.
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EEX Group Sustainability conference
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| On 8th September, EEX Group held its first EEX Group Sustainability Conference – Building Sustainable Markets Together. More than 150 guests followed our invitation to discuss how we as an exchange group, can make a tangible difference to decarbonisation. Watch the recording of the conference now on EEX TV.
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