European Commodity Clearing AG (ECC)

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European Commodity Clearing AG
ECClogo.gif
Founded 2006
Headquarters Leipzig, Germany
Products Clearing and settlement services for energy and other commodities
Website www.ecc.de

The European Commodity Clearing AG (ECC) operates a clearing house for energy and other commodities. Its vision is to become the clearing house of first choice for these products. ECC was spun off as a subsidiary of the European Energy Exchange (EEX) in 2006, and serves to safeguard a secure settlement of transactions.[1]

Its automated and integrated clearing and risk-management services, across a range of markets and commodities, allow ECC to standardize processes and lower collateral requirements, providing members with cross-commodity and cross-currency clearing at a reduced cost. In this process, ECC also takes into account the effect to reduce the total of the margins to be furnished (e.g. cross margining).

ECC operates within an international corporate governance structure and according to internationally recognized standards for capital markets, institutions and clearing houses. ECC is supervised by the German Federal Financial Supervisory Authority (BaFin) and is a designated Payment System according to Article 10 of the Settlement Finality Directive 98/26/EC.

Currently, ECC provides clearing services for the partner exchanges CEGH Gas Exchange of the Vienna Stock Exchange, European Energy Exchange (EEX), EPEX SPOT, Hungarian Power Exchange, POWER EXCHANGE CENTRAL EUROPE and Powernext. Every single trade that takes place on the exchanges is underwritten by ECC, which occupies a central and independent role within the marketplace. Protection against default is provided by an internationally approved margin system and a default fund. Buyers and sellers are also guaranteed complete anonymity at each stage of the transaction.

Foundation

In 2006, the European Energy Exchange (EEX) established ECC as a subsidiary and transferred its clearing activities to ECC in this context. The aim has been to provide clearing services for partner exchanges as well. As a first step in this direction, on 5 July 2006, the European Energy Exchange AG (EEX) and the Amsterdam-based European Energy Derivatives Exchange N.V. (ENDEX) announced they would cooperate in the settlement of energy trading transactions.[2]

This cooperation agreement constituted ECC's first step towards a clearing house working for several exchanges. Since June 12 of 2007, ECC has assumed clearing and settlement of all products traded on ENDEX. Today, ECC acts as central counterparty for six European exchanges and is open for further partners.

Services

Currently ECC offers clearing and settlement services for the following commodities:

  • Power
  • Natural Gas
  • Emission Allowances
  • Coal

As a clearing house specializing in the physical settlement of energy, ECC has contracts with major European transmission system operators (TSOs) both for power and natural gas in Germany, France, the United Kingdom, Austria, Switzerland, Belgium, the Netherlands and Hungary. ECC is able to physically settled trades in all these countries and is a recognized partner for the TSOs.

Development

Since 26 November 2008, ECC has provided clearing and settlement for natural gas contracts traded on the French exchange Powernext SA. Since April 2009, ECC has assumed clearing and settlement of all French power spot and derivatives contracts within the framework of the cooperation between EEX and Powernext.

Since December 2009, ECC also provides clearing and settlement for the newly established natural gas exchange in Austria. Trading is executed through the exchange systems of the Vienna Stock Exchange. The Central European Gas Hub (CEGH) is the delivery point.[3]

On July 20, 2010, ECC launched clearing and settlement for the Hungarian HUPX in partnership with EPEX Spot.[4]

In February 2013, EEX group expanded its range of Trade Registration services step by step, to include additional products not traded on EEX or other ECC partner exchanges. In 2013 EEX and ECC launched three further products (Swiss, Scandinavian and Romanian power trades) for clearing.

In June 2013, the EEX launched trading in Guarantees of Origin for Green Power (GoOs). With the purchase of a green power certificate, energy suppliers can prove that one megawatt hour of power has been produced from renewable energy. Clearing and settlement of all trading transactions are provided by the clearing house ECC.

On September 2, 2013 ECC launched clearing and settlement services for all transactions concluded on the Praguebased Power Exchange Central Europe (PXE).

On December 11, 2013, European Commodity Clearing (ECC) and the Norwegian NOREXECO AS agreed to cooperate in the field of commodity trading and settlement and concluded a corresponding cooperation agreement to this end.

In December 2013, EEX acquired Cleartrade Exchange (CLTX), a Singaporean Futures Exchange founded in 2010, to create a new global commodities offering. The acquisition resulted in a combined group with over 300 members and 10 major asset classes. CLTX adds to EEX’s current product offering such products as freight, iron ore, fuel oil and fertilizer.

Key People

  • Peter Reitz, Chief Executive Officer, chairman of the ECC Management Board since 1st August 2011.
  • Steffen Köhler, Chief Operating Officer, member of the ECC Management Board since 1st November 2012.
  • Iris Weidinger, Chief Financial Officer, member of the ECC Management Board since 1st November 2012.
  • Dr. Thomas Siegl, Chief Risk Officer, member of the ECC Management Board since 1st May 2010.

Resources

Partner exchanges:

References

  1. Credit Risk Management in the European Day-Ahead Power Markets. Futures Industry Magazine.
  2. Press Release. ECC.
  3. Press Release. ECC.
  4. Press Release. ECC.