On 19 March 2015, this year’s first meeting of the Exchange Council of the European Energy Exchange (EEX) was held in Milan. It was chaired by Peter Heydecker, Vitol SA. At the meeting, the focus was on the extension of the product portfolio in the power segment and the transfer of agriculturals trading from EUREX to EEX.
The Exchange Council approved the introduction of further option contracts on the power market. In addition to the existing options on futures for the German/Austrian market area (Phelix Options), EEX is planning to launch options on power futures for the French, Italian, Spanish and Nordic market areas in the second quarter of 2015. Unlike a futures transaction, which has to be fulfilled after the purchase/sale, an option is a conditional derivatives transaction. An option is defined as the contractual right to buy (call) or to sell (put) a specified quantity of an underlying asset at a specified price and time in the future.
Based on the Phelix options, EEX intends to offer options on base-load power futures as month, quarter and year futures. The Exchange Council welcomes the initiative since the new option contracts contribute to bringing additional volume from bilateral trading to exchange clearing and will therefore strengthen EEX’s position on these markets.
In addition, the Exchange Council adopted the contract specifications for the Agricultural Index Futures, which EEX will take over from EUREX. Subject to regulatory approval, the open positions in Agricultural Derivatives will be transferred to European Commodity Clearing (ECC), which will assume clearing and settlement of these products in the future, after the end of trading on 8 May 2015. Trading on EEX will be launched on 11 May 2015. From this point onwards, financially settled futures
on butter, piglets, potatoes, skimmed milk powder, whey powder and hogs will be tradable on EEX. In the course of the migration, product specifications, transaction fees and the trading system will remain unchanged. Dr. Tobias Paulun, Managing Director Exchange, emphasised that the integration of the agricultural products constitutes a further important step for EEX towards becoming a commodity exchange.
Furthermore, the Management Board of the Exchange reported on recent innovations in “Straight-Through Processing” (STP). Since 26 February 2015, trades arranged via brokers have been automatically forwarded to clearing at ECC by default unless the trading participant specifically opts for manual examination steps. The Exchange Council expressly welcomes the further development of the STP processes which further simplifies the registration of trades for clearing for the market participants.
At the meeting, EEX informed the members of the Exchange Council of a notification by the Exchange Supervisory Authority (the Saxon State Ministry for Economic Affairs, Labour and Transport) regarding Trade Registration. The Exchange Supervisory Authority confirmed that it recognises the registration of transactions for clearing as “exchange transactions” since these trades registered for clearing are established as a result of the conclusion of a transaction on EEX. In this respect, they are not OTC contracts within the meaning of EMIR and, therefore, they are not considered in the calculation of compliance with the EMIR threshold for mandatory clearing. The exchange council expressly welcomes the clarification by the Exchange Supervisory Authority, which helps to overcome uncertainties on the part of customers.
The Council met for the last time in its current composition. On 7 May 2015, a new Exchange Council will be elected in accordance with the schedule. The new Exchange Council will meet for the first time in June.
The Exchange Council of EEX is an official body of the exchange under the German Exchange Act. It consists of a total of 24 members who expertly represent the various relevant interest groups and business circles. In addition to the trading participants who are represented by 19 elected members from five different voting groups, four representatives from associations and one representative of energy science are members. The tasks of the Exchange Council include the formulation of the rules and regulations of the exchange and their amendments. The Exchange Council is also tasked with the supervision of the Management Board of the Exchange and the appointment of the Head of the Market Surveillance.