Nodal Exchange

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Nodal Exchange
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Founded 2007
Headquarters Tysons Corner, Virginia
Key People Paul Cusenza, Chairman and CEO
Products Offers futures contracts and related services to North American power markets
Website www.nodalexchange.com

Nodal Exchange, a wholly owned subsidiary of the European Energy Exchange (EEX), is a derivatives exchange providing contracts for North American power and natural gas. All Nodal Exchange contracts are cleared by Nodal Clear, which is a CFTC registered derivatives clearing organization (DCO). [1]

Nodal Exchange is a designated contract market regulated by the CFTC and is an independent, privately held company whose owners include the private equity firm DC Energy, Macquarie Energy and clean energy giant NextEra.[2]

History

The exchange was founded in mid-2007. Shortly thereafter, in November of 2007, Nodal Exchange and LCH.Clearnet signed an agreement to develop a trading and clearing service in North America, providing trading and clearing of cash settled financial nodal power contracts. [3]

In early 2009, Nodal Exchange completed its ownership structure and expanded its board of directors,[4] and on April 8, 2009 Nodal Exchange launched its service to provide trading and clearing of nodal power contracts. The service initially covered Day Ahead trading at nodes across ISO New England, New York ISO, PJM Interconnection, and Midwest Independent Transmission System Operator.[5]

In January 2010, Nodal began offering Real Time LMP Contracts.[6] Later that year it added California ISO, ERCOT and Henry Hub natural gas contracts. [7][8][9]

In March 2012, Nodal Exchange and LCH.Clearnet introduced new power contracts for energy plus congestion - effectively Financial Transmission Rights ("FTR") equivalent contracts - for over 50 locations in PJM.

In October 2012, the exchange filed for designated contract market status with the Commodity Futures Trading Commission, in response to Dodd-Frank Act rule changes for OTC markets. On September 30, 2013, Nodal Exchange began operation as a DCM.

On April 29, 2014, Nodal introduced 18 new power futures contracts covering 3 hub locations in MISO South - Arkansas, Louisiana, and Texas hubs. Nodal Exchange was the first exchange to offer cleared power futures contracts for MISO South locations.

In September 2015, the CFTC granted Nodal Clear, LLC as a derivatives clearing organization. On October 19, 2015, Nodal Exchange, LLC announced the successful migration of 100% of the positions in Nodal Exchange contracts from the previous clearing house, LCH.Clearnet Limited, to Nodal Clear, LLC, the new clearing house subsidiary of Nodal Exchange.

In December 2015, Nodal Exchange introduced 40 new power futures contracts to support trading in Southwest Power Pool (SPP). These were the first SPP futures contracts offered by Nodal Exchange and the first futures contracts to be offered by any exchange on 16 new locations.

In May 2016, Nodal Clear, the clearing house subsidiary of Nodal Exchange, was named “Newcomer of the Year” by Energy Risk magazine at The Energy Risk Awards 2016.

In March 2017, German-based EEX, acquired Nodal, giving EEX its first foothold in North America.

John Lothian News Interviews

Nodal Exchange CEO Paul Cusenza Discusses The Grid and How Power Trading is Changing
Nodal Exchange CEO Paul Cusenza spoke with JLN Editor-in-Chief Jim Kharouf about how the power markets are changing, the impact of Dodd-Frank on the industry and the growth potential for Nodal Exchange and the power markets. Nodal Exchange is the first commodities exchange dedicated to offering locational (nodal) futures contracts and related services to participants in the organized North American power markets. Published November 12.[10]

Products and Services

Contracts

Nodal Exchange offers futures contracts for on-peak and off-peak power contracts at commercially significant hubs, zones, and nodes in the following electric markets: ISO-NE, NYISO, PJM, MISO, ERCOT, CAISO, and SPP. Nodal Exchange also offers a Henry Hub natural gas contract.

Contract Parameters:

  • Location (hub, zone, or node)
  • On-peak or Off-peak (power contracts only)
  • Monthly term
    • Power: Available expiries vary by location - current month plus 68 months on over 90 locations and at least current month plus 12 months on all other locations
    • Natural gas: 68 month series beginning with prompt month
  • Unit of trading
    • Power: 1 MW x hrs/month
    • Natural gas: 2,500 MMBtu per month
  • Commodity
    • Day Ahead Locational Marginal Price (LMP) of power: available for most locations
    • Real Time LMP of power: available for select locations
    • Energy Component of LMP: available for PJM, NYISO, ISO-NE, and MISO
    • Energy + Congestion component of LMP: available for select locations
    • Natural gas: available for Henry Hub

Trading

Nodal Exchange services include both the central limit order book, Nodal LiveTrade and Nodal BlockTrade.

Nodal LiveTrade

Nodal LiveTrade is a central limit order book with a live trading screen where participants may submit orders to transact.

Order Types include:

  • Outright Power at a location (hub, zone or node)
  • Natural Gas at Henry Hub
  • Locational spread between two locations
  • Day Ahead / Real Time spread (DART)
  • Aggregate time periods (strips)
  • Combinations of the above

Nodal BlockTrade

Nodal BlockTrade provides participants with the ability to clear their block trades of Nodal Exchange's futures contracts for power and natural gas. Participants and their brokers can use the Nodal BlockTrade service to submit block trades for clearing by LCH.Clearnet, which occurs during trading hours.

Key People

Key Shareholders

Nodal is privately-held. Major shareholders include affiliates of:

Honors/Awards

  • “Innovation of the Year,” Energy Risk Awards (2010)[11]
  • Platts Global Energy Award of Excellence, Rising Star category (2010)[12]
  • "Exchange of the Year," Energy Risk (2013)
  • Platts Global Energy Award for “Rising Star Company” (2013)
  • "Newcomer of the Year," Energy Risk Awards (2016) -- Nodal Clear

References

  1. Press Release. CFTC.
  2. Shareholders. Nodal Exchange.
  3. Press Release. LCH.Clearnet.
  4. Press Release. Nodal Exchange.
  5. Press Release. LCH.Clearnet.
  6. Press Release. LCH.Clearnet.
  7. Press Release. Energy Biz.
  8. Press Release. LCH.Clearnet.
  9. Press Release. Nodal Exchange.
  10. Nodal Exchange CEO Paul Cusenza Discusses The Grid and How Power Trading is Changing. John Lothian News.
  11. Press Release. Nodal Exchange.
  12. Press Release. Nodal Exchange.