June 5th, 2014
Marriott Hotel Leipzig
Annual EEX Group Workshop 2014
Introduction
Agenda
Time
Room 1
Room 2
Room 3
11.00 – 12.00
General Welcome/Introduction Speech
12.00 – 13.00
Lunch Break
13.00 – 14.00
EPEX
• Market Review
• Current product design developments
• Status and planning of the European coupling projects
PEGAS
• An update on growing volumes
• Introduction of NBP and Zee market areas
REMIT
• Disclosure of insider information
• Reporting of fundamental data (ACER/ENTSO-E)
• Reporting of transactional data under REMIT and EMIR
14.00 – 14.30
Coffee Break
14.30 – 15.30
European Power
• Market Outlook
• Introduction to latest products
• New initiatives
Cleartrade
• Introduction of Cleartrade Exchange
• The Cleartrade Platform
• EEX/Cleartrade Exchange Partnership
Regulatory CCP
• Implementation of EMIR requirements
• Segregation models
• Reporting of transactional data
15.30 – 16.00
Coffee Break
16.00 – 17.00
ECC
• New markets / new partner
• Product innovations
• Improvements connectivity (STP)
• Outlook – Limit infrastructure
Technology
• How to connect to EEX
• Current available Front ends
GoO
• Market Developments
• Initiatives
• The European Energy Exchange (EEX) develops, operates and connects secure,
liquid and transparent markets for energy and related products.
• EEX holds 50 percent of the shares in the Paris-based EPEX SPOT SE which
operates the Spot Market for power for delivery in Germany, France, Austria and
Switzerland.
• German and French power derivatives trading is concentrated within EEX Power
Derivatives GmbH, a majority-owned EEX subsidiary based in Leipzig.
• Furthermore, EEX organises trading markets for natural gas shared together with
Powernext in the Pegas cooperation, CO
2emission allowances, coal and
guarantees of origin.
• Through its majority shareholding in Cleartrade Exchange (CLTX), EEX additionally
offers the markets for freight, iron ore, fuel oil and fertilisers.
Corporate Structure
50% 80% 98.5% 20% European Commodity Clearing AG 12% European Market Coupling Company GmbH 100% Storage Capacity Exchange GmbH EEX Power Derivatives GmbH 100% Global Environmental Exchange GmbH 100% EPEX SPOT SE Cleartrade Exchange Pte Ltd. European Commodity Clearing Luxembourg S.à.r.l. 52% Fu rthe r s ha reh ol di ng sEuropean Energy Exchange AG
EGEX European Gas Exchange GmbH
29 May 2013: Launch of the natural gas cooperation
of EEX and Powernext
PEGAS – one Platform for one
European Gas Market
• Both partner exchanges create a
pan European market for natural
gas trading.
• German, French and Dutch natural
gas products and related spreads
are bundled on one platform.
• Harmonization of trading and
processing trough the use of a
common system and clearing
via ECC
PEG Nord PEG Sud PEG TIGF GAS POOL NCG TTF1. Access to all EEX and Powernext
products on a single trading platform, based
on Trayport® technology
2. Trading of location spread is possible,
therefore potential for higher liquidity in the
cooperation markets
3. Improved customer relations through
coordinated teams
4. Harmonization of trading processes in all
cooperation markets
5. Facilitation of membership from one
exchange to the other
Benefits of the cooperation
EEX Shareholders
Overview
62.57% 11.90% 25.53% Eurex Zürich AG Saxon ShareholdersPool of minor shareholders from industrial, energy and financial companies
EEX Shareholders
List
As of 31 December 2013 01 50Hertz Transmission GmbH D 4.31% 02 Alpiq AG CH 4.50% 03 DB Energie GmbH D 0.50% 04 e&t Energie Handelsgesellsch aft m.b.H. A 0.50% 05 E.ON Global Commodities SE D 3.48% 06 EDF Électricité de France F 0.67% 07 Edison S.p.A. I 0.76% 08 EnBW Energie Baden-Württemberg AG D 3.30% 09 Eurex Zürich AG CH 62.57% 10 Freistaat Sachsen D 4.51% 11 Iberdrola Generación, S.A.U. E 0.50% 12 LVV Leipziger Versorgungs- und Verkehrsgesellsc haft mbH D 7.38% 13 Morgan Stanley Capital Group Inc. UK 0.50% 14 MVV Energie AG D 0.99% 15 RWE Beteiligungsgesel lschaft mbH D 4.35% 16 Stadt Leipzig D 0.01% 17 SWU Energie GmbH D 0.25% 18 UBS AG CH 0.25% 19 VERBUND Trading GmbH A 0.67%EEX Trading Participants
1 14 7 6 44 17 2 5 11 2 6 1 8 11 15 81 3In total 249 trading participants from 25 countries:
174 participants Power Derivatives Market 150 participants Natural Gas Market 192 participants Emissions Market 135 participants Coal Market
5 3 3 1 1 1
EEX order book(s) OTC registration
ECC - A clearing house serving the European
Energy markets
Partner Exchanges
French and Dutch Natural Gas
German, French, Austrian, Swiss Power Spot, Trilateral Market Coupling EMCC, CWE, NWE
Czech / Slovakian / Hungarian Power Czech natural gas
Austrian Natural Gas
Hungarian Power Phelix Futures & Options, French / Dutch / Belgian Power Futures, GOOs, Emissions Derivatives and Spot, Coal Futures (USD), Coal and Power for OTC Registration
Gas Derivatives and Spot
EEX order book launch and Trade Registration available for EEX Trade
Spot Market
Derivatives Market
Trade Registration
for Clearing
Power EPEX SPOT Day ahead auction (D/A, F, CH) Intra-Day (D/A, F)
Power EEX Power Derivatives Phelix-Futures
French/Dutch/Belgian/Italian-Futures Options on Phelix-Futures
Power
Corresponding products
Power Futures for Switzerland, Italy, Scandinavia, Romania and Spain Natural Gas
Physical Futures (NCG, GASPOOL)
Emission Allowances
Secondary Market for EUA and CER spot contracts
EUA Primary Auction Spot
Guarantees of Origin Nordic Hydro
Alpine Hydro
Central Northern Europe Wind Natural Gas
Physical Futures (NCG, GASPOOL)
Emission Allowances Secondary Market for EUA, EUAA, CER and ERU Futures EUA Primary Market Derivatives
Coal Natural Gas Corresponding products NBP Gas Futures Emission Allowances Corresponding products Guarantees of Origin Corresponding products Coal
Positions in EEX Spanish Power are fully integrated in the Cross-Margining of ECC
Advantage: X-Margining
High potential for margin savings
Level 1
Combined commodities: Netting of Futures and Options with the same underlying
Level 2
Perfect Spreads between products with perfect overlapping delivery period and profile:
•A year against its 4 quarters
•Baseload against peakload and offpeak of the same delivery period
Level 3
Spreads between all possible combinations of two products with different: •Commodities •Delivery area •Delivery profile •Delivery period •Maturity Netting efficiency 100% Netting efficiency 99% Netting efficiency 0% - 99%
In a simplified portfolio with 1 front month
base French Power (long) and 2 front month
base Italian Power (short), initial margins
would be
reduced by 51%
through
cross-margining
Recent Initiatives & Changes
EEX
Access
249 EEX admitted members as of May 1st
The number of active companies is higher due to indirect market access
Around 800 Trayport screens issued to traders
Over 80% of OTC trade registration volume is through STP services
Introduction of new EEX front-end to be announced soon
Trade Registration Bundle extended to cover Spanish market
Italian offering extended to include screen. Excellent volume developments
Milan, Madrid and planned Zurich and Geneva (gas) trader events
Planned introduction for Polish power
Successful coal clearing re-launch commenced in May
Liquidity Providers signed up for Italian power
Options workshop underlines forthcoming changes to the market offering
Big improvements in the Phelix spreads
EEX
Access
Products
Liquidity
Harmonization of the EEX trading calendars
Calendar
Market Structure – Power Derivatives
Comparisons
Shares are linked to righthand axis Shares are linked to righthand axis Volumes/ deviation vs. prev. month in Apr 2014 (TWh/ %): Volumes in Apr 2014: Volumes in Apr 2014:
EPD 107,5/ -16,6 NASDAQ 129/ -18,3 EPD 3,5 TWh market 59,6 TWh EPD IT 7,2 TWh IDEX 1,6 TWh ICE 13,9/ 9,2 OMIP 5,6/ -37,6
Volumes in Apr 2014: Volumes in Apr 2014: EPD NL/BE 0,1 TWh ICE 13,7 TWh EPD 0,2 TWh
*Market is defined as LEBA plus exchange volume (incl. trade registration). Late reporting volumes are added to previous months. Market volumes are the volumes published by London Energy Broker Association and cover the volumes of Evolution Markets, GFI Brokers, ICAP Energy, Marex Spectron, Traditional Financial Services and Tullet Prebon Energy.
Competitor comparison European Futures & Forwards (TWh)
Power Futures - Netherlands + Belgium (TWh)
Power Futures - France (TWh)
Power Futures - OTC bundle excl. Italian Futures (TWh)
Power Futures - Italy (TWh)
0 50 100 150 200 250 0 5 10 15 05/2012 11/2012 05/2013 11/2013 EPD APX/ENDEX ICE NASDAQ OMIP
04/2014 0% 3% 5% 8% 10% 13% 15% 18% 20% 0 10 20 30 40 50 60 70 80 05/2012 11/2012 05/2013 11/2013 market EPD ms EPD mov avg
04/2014 0 2 4 6 8 10 12 14 16 05/2012 11/2012 05/2013 11/2013 EPD NL/BE APX/ENDEX ICE
04/2014 0,00 0,10 0,20 0,30 0,40 0,50 0,60 0,70 0,80 0,90 05/2012 11/2012 05/2013 11/2013 EPD 04/2014 0% 2% 4% 6% 8% 10% 12% 14% 0 10 20 30 40 50 60 70 05/2012 11/2012 05/2013 11/2013 EPD IT market IT* (sec. Axis) IDEX IT ms EPD
Typical Stages of Commodity Markets
Immature Market Developing Market Mature Market Description Churn Rate Trigger 0 - 1 1 - 3 > 3• Few market participants • Little standardization • Focus on bilateral trading
• Focus on physical OTC trading, brokers entering market
• Higher standardization of products and procedures • Financial participants without
physical interest (banks, brokers) • Indices evolving
• Strong trading of
standardized exchange products in addition to OTC trading
• Significant participation of financial players
• Strong transparency in prices and volumes through recognized reference
products and indices
• Breaking up of vertically integrated monopolies, e.g. through third party access
• Necessity of financial risk management
• Sufficient establishment of
• Pressure on transparency and further standardization through regulators and
Business Opportunities in developing
markets – International power markets
Power Market Maturity
State controlled
Market
• Vertically integrated public companies
• Regulated end-user tariffs • Extensive cross-subsidies
Transforming Market
• Privatization and unbundling
• Independent regulator • Eligible consumers free to
choose suppliers • Power Exchange setup • Strong growth of OTC
market
• Evolving Day-Ahead Market • Physical futures
Mature Market
• Full end-user liberalization • Participation of purely
financial players • Speculative trading
motivations
• Financial Futures, Options
• Liquid Intraday Market International energy markets show significant variations in market maturity, influencing probability of success for various market entrance models
When is a market mature?
Market Physical Volume (TWh) Unregulated Market (TWh) Assumed Churn Rate (2014) Market Deregulation started in China 4,700 0 0.05 2002 United States 3,886 3,856 6.5 1992 Russia 1,021 766 1.1 2007 Japan 1,006 1,006 0.1 2000 India 855 51 0.1 2000 Canada 510 30 1 1997 France 492 170 2 2000 Brazil 483 121 3.5 1996 Nordic Markets 347 347 8 1990 United Kingdom 328 328 4 1990 Italy 314 322 2 1991 Spain 246 66 2 1998 Turkey 229 160 1.3 2001 Australia 227 215 4 1994 Poland 149 140 2 1997 Ukraine 140 140 0.1 1994 Argentina 111 30 0.5 2000 Chile 110 100 0.1 1982 Kazakhstan 77 0 0.1 2004 Czech Republic 64 64 3 2000 Colombia 56 18 2 1994 Romania 55 29 1 2007•
Physical market size of most
emerging countries growing at
tearing speed
•
End-user liberalization often only
for industrial consumers, but share
of unregulated customers catching
up in most markets
•
Sustainable liberalization process
is often diluted and delayed from
regulated end-user prices,
cross-subsidies and close-to-government
regulation
•
Market design largely driven by
fundamental indicators, such as
Implications for EEX offering
Market Needs Participant Interest EEX to-do Immature Market • First clearing Offering • Stable Platform • Local platform • Politics
• Integrate local partners, especially in highly politicized markets • Concentrate on clearing offering first Developing Market • Liquidity Pool • Non-discriminatory access, anonymity • Harmonization • New Participants • Transparency • Market Rules • Mitigate counterparty risks
• Concentrate on order book volumes
• Leverage EEX reputation as transparency provider and supervised market
• Investment into Market Makers
Mature Market • Efficiency • Financial Players • Internationalization • Harmonization
• Link to bigger markets • Ensure competitive price offering • Leverage liquidity in existing
Transaction cost for EEX Power futures
Total costs of trading from an EEX client perspective
(trading and clearing fees plus 50% bid/ask spread in 4/2014):
0 20 40 60 80 100 120
Week Month Quarter Year Week Month Quarter Year Week Month Quarter Year
Italy French PHELIX
ct/
M
Wh
Trading Clearing 50 % B/A Spread
0 1 2 3 4 5 6
Phelix Front Year
ct
/M
W
