Title Transfer Facility

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Title Transfer Facility
Founded 2003
Headquarters The Netherlands
Products Natural Gas Trading

The Dutch Title Transfer Facility (TTF) is a virtual trading hub for the Netherlands’ natural gas market.

History

The TTF was set up in 2003 to promote gas trading on one central marketplace, enhancing the liquidity of the gas trade. The Dutch gas transfer facility has grown significantly since, and it is now the biggest on mainland Europe. Gas tariffs on the Dutch wholesale platform have become important reference tariffs for the rest of Europe. [1]

Trade on the Dutch TTF has surged as Europe increases imports from Russia, Norway and beyond via liquefied natural gas tankers, Bloomberg reported in November 2020. Natural gas futures open interest, a tally of outstanding contracts on the Intercontinental Exchange Inc., was at an all-time high in 2020 using data going back to 2005. [2]

Products and Services

TTF serves as the premier trading and risk management instrument for gas trading in Europe, mirroring the outsized role that the Dutch gas network plays for physical flows throughout Northwest Europe. The TTF market is highly liquid across exchange-traded and OTC markets and TTF natural gas prices are positively correlated to those in neighboring, less liquid hubs. Price differences between those markets tend to reflect the regional supply and demand balance, transportation costs and capacity constraints between two adjacent hubs.

European natural gas markets are steadily moving away from long-term oil-indexed contracting. Because of its high liquidity and price relevance across Europe, TTF has become one of the favored pricing mechanisms. For example, Gazprom Export, the Russian company’s supply arm, started selling natural gas on its electronic sales platform directly delivered on the TTF hub in February 2019.

Beyond European markets, the use of TTF has also grown because it has become a reference point for LNG market participants. LNG exporters that have uncontracted volume can optimize flexible cargoes between Asia and Europe, and TTF has emerged as the main European benchmark price for arbitragers. [3]



References

  1. TTF. Gasunie Transport Services.
  2. The Global Hub for Trading Natural Gas Moves to the Netherlands. Bloomberg.com.
  3. A Story of Success: The Evolution of TTF Trading. CMEGroup.com.