Leipzig/Paris, 9 February 2016 – The revision of the Markets in Financial Instruments Directive (MiFID II) will fundamentally change the framework conditions for trading power and natural gas derivatives contracts. As a result, many commodity firms who trade energy derivatives through an exchange may have to adhere to additional requirements as these products are classed as financial instruments.
The MiFID II legislation outlines a specific framework for power and gas contracts that can be physically settled and are not traded on an exchange. In this context, it will be possible to trade power and gas derivatives on a specific multilateral platform, the so-called “Organised Trading Facility” (OTF), which will be formalised in the course of 2016. Physically settled transactions concluded on an OTF are not considered as financial instruments under MiFID II. Today, these trading venues are known as “non-MTF” as the license for an OTF is not yet available.
Therefore, EEX and Powernext will launch additional trading venues for power and gas derivatives in line with the new legislation. These new trading venues which are scheduled to be launched in the second quarter of 2016 will be in addition to the existing exchange market. All contracts will be cleared by European Commodity Clearing (ECC), thereby ensuring that trading is secure and anonymous. Once MiFID II comes into effect, EEX and Powernext will apply for an OTF license for this market segment.
In launching these additional trading venues, customers will be able to trade on both the exchange and the upcoming OTF platform, thereby widening their trading scope and capability. These new products as operated by EEX and Powernext will continue to retain the high standards of transparency and supervision which customers have come to expect from the exchange. In particular, they will benefit those physical players who trade in financial instruments mainly for hedging purposes.
The European Energy Exchange (EEX) is the leading energy exchange in Europe. It develops, operates and connects secure, liquid and transparent markets for energy and commodity products. At EEX, contracts on Power, Coal and Emission Allowances as well as Freight and Agricultural Products are traded or registered for clearing. Alongside EEX, EPEX SPOT, Powernext, Cleartrade Exchange (CLTX) and Gaspoint Nordic are also part of EEX Group. Clearing and settlement of trading transactions are provided by the clearing house European Commodity Clearing (ECC). For more information: www.eex.com
Powernext is a regulated market operating under AMF supervision. Powernext manages the natural gas activities of the EEX Group under the PEGAS brand throughout Europe, and operates the National Registry for electricity guarantees of origin in France. For more information: www.powernext.com