European Energy Exchange AG

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European Energy Exchange
Logo EEX new2.jpg
Founded 2002
Headquarters Leipzig, Germany
Key People Peter Reitz, Steffen Köhler, Iris Weidinger, Dr. Thomas Siegl
Employees 550
Products Spot and derivatives markets for power, natural gas and emission allowances, financial coal futures
Website http://www.eex.com/en

The European Energy Exchange (EEX) is a 75% subsidiary of Deutsche Boerse. It is a regulated commodity exchange which owns and operates several commodity markets in Europe, Asia and the United States. It is part of EEX Group.

Based in Leipzig, Germany, EEX offers energy, environmental, agricultural, freight and iron ore contracts across its exchanges. It is best known as the largest power market in Europe, and is a majority owner of European power market, Powernext among others. In the US, EEX is the parent company of the Nodal Exchange, based in Tysons Corner, Virginia, which offers power and environmental contracts. It also is the owner of Singapore-based EEX Asia and Cleartech (formerly called Cleartrade Exchange (CLTX)), which lists futures on freight, fuel oil and iron ore. And it acquired the Nasdaq Futures Exchange in November 2019, expanding further into US power, dry bulk freight, crude oil, natural gas and ferrous metals.[1]

It offers contracts to more than 500 trading participants from more than 30 countries. [2]

EEX operates its spot market and listed derivatives contracts on Deutsche Boerse's "T7" trading platform, the same system used by Eurex and Deutsche Boerse's cash market.[3] The EEX Spot Markets for emission allowances are operated on the trading system ComXerv. Within the context of PEGAS, the natural gas spot and derivative markets are operated on the Trayport ETS trading system. The platform can be accessed through EEX's front-end trading screen called EEX TT Screen, provided by Trading Technologies.

All European and EEX Asia futures and OTC trades are cleared and settled through the exchange's clearing house, European Commodity Clearing AG, or ECC. The ECC is a subsidiary of EEX and also provides clearing services for European exchanges and EEX Asia. The Nodal listed contracts are cleared by Nodal Clear in the US market.[4]

History[edit]

EEX traces its roots back to the creation of the LPX Leipzig Power Exchange in 2000 and was created as a result of a merger between LPX Leipzig Power Exchange and the Frankfurt-based European Energy Exchange in 2002. Since then, it has grown into a global commodities market through a series of partnerships and acquisitions throughout Europe, Asia and in the US.

The EEX Group includes: EEX, European Commodity Clearing, EPEX SPOT, Powernext, PEGAS, PXE, Nodal Exchange and Nodal Clear and EEX Asia. EEX serves as the commodities market structure for Eurex Group.[5] [6]

In 2005, EEX began offering emissions contracts and in the following 12 years, more than 3.5 billion European emissions allowances were traded on the exchange. The exchange is approved by the European Union to carry out auctions on emissions for 25 EU member states.[7]

European Commodity Clearing (ECC), the clearing house for EEX's transactions, was spun off in 2006. ECC offers clearing on other exchanges including EEX partner exchanges such as: EPEX SPOT, EPEX SPOT Belgium, Hungarian Power Exchange (HUPX), Norexeco, Power Exchange Central Europe (PXE), Powernext and SEEPEX.[8]

EEX and the Amsterdam-based ENDEX European Energy Derivatives Exchange N.V. (today: APX-ENDEX Group) began cooperating in the settlement of energy trading transactions in July 2006.[9]

In 2007, the power spot trading company of EEX was spun off into an independent company called EEX Power Spot GmbH, wholly owned by EEX. In 2008, the derivatives market was also spun off into an independent subsidiary called EEX Power Derivatives GmbH.

On Dec. 11, 2007, EEX AG approved the integration of the power spot and derivatives markets of EEX and the French exchange Powernext into independent companies: the Spot Market Company, based in Paris, and the Derivatives Market Company, based in Leipzig. The clearing and settlement of all products from the spot and derivatives market is provided by European Commodity Clearing AG (ECC) in Leipzig.

On Sept. 19, 2008 EEX and Powernext announced the incorporation of the new spot trading company under the name EPEX Spot SE – European Power Exchange. Both partners hold 50 percent of the shares in the new Societas Europaea (SE), which has its registered offices in Paris. EEX and Powernext integrated their entire spot power trading activities into EPEX Spot SE.[10]

On Apr. 2, 2009, European Commodity Clearing AG concluded the transfer of the positions in Powernext Power Futures. EEX Power Derivatives, in which EEX holds 80 percent of the shares while the Paris-based Powernext holds the remaining 20 percent, continues power derivatives trading for France, completing the integration of the power derivatives markets. [11]

On June 25, 2009, the EEX clearing house European Commodity Clearing AG (ECC), the Vienna Stock Exchange and the Central European Gas Hub said ECC would provide clearing and settlement for the new natural gas exchange in Austria. [12]

EEX Power Spot was merged into EPEX Spot SE based in Paris on Sept. 1, 2009, as the final step of the cooperation. An EPEX Spot branch in Leipzig continues to support the German customers. The joint company EPEX Spot SE operates the short-term power trading activities for the market areas Germany/Austria, France and Switzerland. [13]

On Oct. 30, 2009, the website “Transparency in Energy Markets” was launched. EEX and the four German transmission system operators (TSOs), 50 Hertz Transmission GmbH (formerly Vattenfall Europe Transmission GmbH), Amprion GmbH, TransnetBW (formerly EnBW Transportnetze AG) and TenneT TSO GmbH (formerly transpower stromübertragungs gmbh) implemented a new central transparency platform for generation and consumption data. This step fulfilled the publication requirements under the “Congestion Management Guidelines”. [14] Austrian TSO Austrian Power Grid AG joined the platform as the sixth member in December 2010 and started transmitting data for the APG control zone in July 2011. [15]

In January of 2010 EEX began running the primary auction for European emission allowances (EUA) in Germany on behalf of the German Federal Ministry for the Environment at the invitation of the Ministry. [16]

Eurex acquired a majority stake in EEX in 2011, exercising an option that would give Eurex a 58.19 percent stake in the exchange, up from 35.2 percent.[17] [18] Eurex held a 63 percent stake in EEX, in 2017.[19]

EEX opened a London office in July 2011, the first office outside of Leipzig, Germany. [20] In January 2012 EEX officially opened its political representation in Brussels.[21]

On May 29, 2013, EEX and Powernext launched their Pan-European Gas Cooperation, or PEGAS, combining their natural gas markets for a pan-European gas offering. It is the single trading platform for natural gas contracts on Austrian, Belgian, Danish, Dutch, French, German, Italian and UK markets. It added spot and futures contracts from the Austrian gas market, Austrian Central European Gas Hub (CEGH), in January 2016. CEGH is a hub for spot and futures gas trading for Central and Eastern Europe.[22][23]

In 2014, EEX acquired Cleartrade Exchange (CLTX), a Singaporean Futures Exchange founded in 2010, to create a new global commodities offering. The acquisition expanded EEX Group to more than 300 members and 10 major asset classes. In November 2018, Cleartrade was rebranded as EEX Asia, offering futures contracts on freight, fuel oil and iron ore. All of its contracts are cleared through the EEX's clearinghouse, European Commodity Clearing, which is recognized by Singapore's regulatory agency. The second part of Cleartrade was renamed Cleartech, which serves as the custodian for OTC pre-trade, intra-trade and post-trade technical and price transparency services.[24][25]

EEX was folded under the Eurex group of organizations and became a fully consolidated subsidiary on January 1, 2014. [26]

In January 2015, EEX became the majority shareholder of Powernext. The two companies had been partnered since 2008. The deal gave EEX 55.8 percent of Powenext.[27]

In May 2015, EEX moved in the agriculture space, offering contracts on potatoes and dairy products, thus marking EEX as the commodities exchange for Deutsche Boerse.

The exchange grew through its 2017 purchase of Nodal Exchange, which marked EEX's entrance into the US market. Nodal offers derivatives trading on electricity with more than 1,000 contracts and clearing through Nodal Clear. It also offers a Henry Hub natural gas contract, which allows for cross-margining with power portfolios. The terms of the deal were not specific, but it was priced at "a low triple digit million US-dollar investment."[28]

In August 2017, the exchange partnered with Chicago-based IncubEx, which is focused on product development, marketing and sales.[29]

In October 2017, EEX and the China Beijing Environment Exchange signed a memorandum of understanding to help the development of Chinese carbon markets.[30]

In December 2018, EEX acquired Grexel Systems Oy, a provider of energy certificate registries in Europe. The firm holds 42 percent of the market in new certificates within the European Certification Scheme.[31]

In August 2019, EEX's clearinghouse, European Commodity Clearing (ECC), completed its migration onto the C7 system, which is the clearing platform developed by Deutsche Boerse. It began the process in 2017. ECC provides clearing services for EEX, EEX Asia, EPEX SPOT, Powernext and Power Exchange Central Europe (PXE) as well as the partner exchanges HUPX, HUDEX, NOREXECO, SEEPEX and SEMOpx.[32]

In November 2019, EEX announced the acquisition of the Nasdaq Futures Exchange (NFX) and its U.S. Power, U.S. natural gas, crude oil, ferrous metals and dry bulk freight futures and options contracts. Contracts will be migrated over to EEX's Nodal Exchange.[33]

Exchange Products and Services[edit]

Power[edit]

Spot Market Power[edit]

EEX AG and Powernext SA integrated their power spot markets into the joint exchange EPEX Spot SE which was incorporated in September of 2008. It is a company according to European law (Societas Europaea) based in Paris. EEX operates the spot eletricity markets for Germany, France, United Kingdom, the Netherlands, Belgium, Austria, Switzerland and Luxembourg. PEX SPOT offers coupled and uncoupled day-ahead and local intraday auctions as well as local and cross-border continuous trading.

  • Intraday/Spot: In intraday trading, power contracts with delivery on the same or on the following day are traded. EPEX members can trade hourly deliveries of power up to 45 minutes before the beginning of the hour concerned.
  • Day Ahead: On the day-ahead market, power is traded for the next day. The trading participants use the day-ahead market to optimize the procurement and sale of quantities of electricity in the short term. The bids of the hourly auctions allow different buy and sell quantities to be placed at different respective prices in the auction. On every day of the week, EPEX SPOT operates day-ahead trading for three market areas: Germany/Austria, France and for Switzerland with physical delivery in the respective grid areas on the next day.
  • Phelix: The "Phelix Day Base" (Phelix =Physical Electricity Index) is the daily average of all power prices for the hours 1 to 24 traded on the Spot Market for delivery in the German/Austrian market area.

Derivatives Market Power[edit]

On the EEX Power Derivatives Market financially settled futures for Germany/Austria and France (Phelix Futures and French Futures) and Phelix options can be traded as well as physical Belgian, Dutch and French Power Futures. At present, EEX offers trading of day, week, month, quarter and year futures. Moreover, trading participants can register OTC trading transactions for Romania, Scandinavia, Italy and Switzerland for clearing on EEX.

  • Phelix Futures: The Phelix Future is a financial derivatives contract referring to the average power spot market prices – more specifically to the EPEX Index Phelix – of future delivery periods on the German/Austrian market area. Phelix futures are traded for days, weekends, the current week and the next four weeks, the current month and the next nine months, the next eleven quarters and the next six years. Base load, peak load and off-peak are the tradable load profiles.[34] Since November 2009, Eurex customers are able to trade and clear EEX power derivatives via their existing Eurex access. Since December 2007, EEX and Eurex have already been cooperating in emissions trading.[35]
  • Phelix Options: EEX offers trading in options on the Phelix Base Future (Month, Quarter, Year). In addition, EEX offers four expiry dates for options on Phelix Base Year Futures, the so-called Short Dated Options. Regardless of the different maturities, the corresponding futures position of the underlying asset is booked upon exercising of the option.

Financially-settled power futures[edit]

EEX added financially-settled UK power futures to its European power derivatives offerings on November 16, 2015, settled against the APX Power UK auction price. The exchange will offer the full curve, from day futures to calendar years.[36] The underlying APX index became part of EEX in May of 2015.[37]

Guarantees of Origin[edit]

Guarantees of Origin (GoO) are certificates which confirm that a given Megawatt Hour of power has been generated from renewable resources. These are exclusively issued for disclosure and transparency purposes and they are cancelled upon use. Trading in Guarantees of Origin on EEX is not connected with the delivery of power. Guarantees of Origin can be traded up to three years into the future. There are two maturities per year.

EEX offers three products on the Derivatives Market:

  • Nordic Hydro - Guarantees of Origin for Hydropower from Scandinavia (Denmark, Finland, Norway and Sweden)
  • Alpine Hydro - Guarantees of Origin for Hydropower from the Alpine region (Germany, Austria and Switzerland)
  • Central Northern European Wind - Guarantees of Origin for Wind Power from north-western Europev (Belgium, Denmark, Germany and the Netherlands)

Natural Gas[edit]

In July 2007, EEX launched natural gas trading on the spot and derivatives market. Meanwhile, PEGAS - the cooperation between EEX and Powernext - offers exchange trading in natural gas for the GASPPOL, NetConnect Germany (NCG), Title Transfer Facility (TTF) and PEG (Nord, Sud and TIGF) market areas.[38]

PEGAS[edit]

PEGAS is a cooperation between European Energy Exchange (EEX) and Powernext, which was launched on May 29, 2013. In the framework of this cooperation, both companies have combined their natural gas markets to create a pan-European gas offering. The arrangement provides members with one common gas trading Trayport platform with access to all products offered on the exchanges: spot and derivatives products for the German, French and Dutch market areas. Furthermore, spread products between these market areas are offered on the same trading platform.

Spot Market Natural Gas[edit]

On the day-ahead market, natural gas is traded for the next, the next-but-one day and the weekend. The day-ahead market is used for the short-term optimization of the procurement and sale of gas quantities. EEX offers day-ahead trading for three market areas: Gaspool Natural Gas Day Contracts, NCG Natural Gas Day Contracts and TTF Natural Gas Day Contracts. [39]

In 2011, EEX introduced 24/7 trading on the Natural Gas Spot Market. On the Spot Market, companies can trade natural gas on a continuous basis for the current day (within day), one day and two days in advance as well as for the following weekend. Since the launch of 24/7 trading EEX has also offered continuous trading with a minimum lot size of 1 MW (in addition to the 10 MW contracts).

Derivatives Market Natural Gas[edit]

On the derivatives market, natural gas is traded for the current month, for the next six months, the next seven quarters and the next six calendar years. The derivatives market is used for medium-term optimization of the procurement and sale of quantities of natural gas. On every exchange trading day, continuous trading of GASPOOL Natural Gas Futures Contracts and of NCG Natural Gas Futures Contracts takes place for the respective market area. On the EEX Derivatives Market the Balance of the Month (BoM), the respective next six months, seven quarters and six years can be traded for each market area and, in addition, the respective next four seasons (summer and winter season) can be traded in the NCG market area. [40]

As of 27 January 2011 EEX publishes a new European Gas Index – EGIX – which is based on all exchange trades concluded in the respective current front month contracts of the NCG and GASPOOL market areas on the Derivatives Market.[41]

Emission Allowances[edit]

Spot and Derivatives[edit]

Since 2005, EEX operates both spot and derivatives markets in emission allowances.[42] EEX has offered trading of emission allowances on the basis of the EU Emissions Trading Scheme (EU ETS) since 2005. EEX currently runs a secondary market for continuous trading on a Spot and Derivatives basis for EU ETS allowances (EUA, EUAA) and Kyoto credits (CER, ERU).[43]

EEX and Eurex - Joint Forces in CO2 Trading

Since December 2007, EEX and Eurex have been successfully cooperating in emissions trading. The alliance combines EEX’s energy market membership and connectivity to the European power trading community with Eurex’s financial market membership and global distribution network. The cooperation initially started with trading of the already available EUA Futures on EEX for the Kyoto phase 2008-2012.

As of March 26, 2008, it is possible to trade CER Futures on the EEX (Certified Emission Reductions), global emission credits in accordance with the Kyoto Protocol. On 14 April 2008 EEX and Eurex launched trading of options on EUA Futures.

On Oct. 27, 2009, EEX and Eurex launched new emission rights contracts. In addition to the contracts already offered, EUA and CER Futures with a different maturity and delivery date were introduced. [44]

EEX awarded EU Primary Market Auction

Since January 2010 EEX AG runs the auctioning of the Emission Allowances issued by the Federal Ministry of the Environment. All trading participants admitted to trading in emission allowances on EEX are able to take part in the auction without any further preconditions regarding licensing. From the very beginning, this also included all trading participants taking part in the existing Eurex cooperation on the Derivatives Market.

In addition, EEX also carries out the EUA auctions for Lithuania (in 2011 and 2012) and the Netherlands (in 2011 and 2012). Furthermmore the European Energy Exchange (EEX) has won the tendering procedure for the transitory auctioning platform for the EUA auctioned off by Germany for the third emissions trading period in February 2012 and it was chosen as cooperation exchange for the NER30 program of the European Investment Bank (EIB).

As of 30 April 2012, emission allowances for the aviation industry (EU Aviation Allowances – EUAA) will also be offered for trading. Furthermore, Futures on Emission Reduction Units (ERU) will be launched at the end of April. In March, EEX extended the futures on Certified Emission Reductions (CER) for all maturities of the third trading period.

Coal[edit]

EEX offers exchange trading of coal futures and Trade Registration of coal futures. Amsterdam-Rotterdam-Antwerp (ARA) and Richards Bay (RB) coal futures referring to API 2 (ARA) and API 4 (RB) indices can be traded. The contracts are financially settled on the basis of these two indices.[45]

Transparency[edit]

EEX operates "Transparency in Energy Markets”, the neutral platform for energy market data which fulfils the statutory publication requirements and implements the market participants’ voluntary commitments. The platform was established by EEX and the four German transmission system operators and launched in October 2009. In 2011, the Austrian transmission system operator Austrian Power Grid AG joined the cooperation. EEX is in charge of the operation of the platform, which comprises plausibility checking, anonymisation, aggregation and publication of the data reported.

On September 2, 2014, the European Energy Exchange (EEX) launched its new transparency site. At www.eex-transparency.com, visitors can gain access to comprehensive fundamental data and relevant information for wholesale energy trading. The website is a further development of the existing platform “Transparency in Energy Markets” and contains information about capacity, utilization and availability of facilities for the production of electricity as well as new information on the storage of electricity and natural gas consumption.

Key People[edit]

Annual Reports[edit]

References[edit]

  1. ↑ EEX – Moving into the major league. FTSE Global Markets.
  2. ↑ About EEX video. EEX.
  3. ↑ Press Release. EEX.
  4. ↑ EEX Annual Report 2017. EEX.
  5. ↑ Deutsche Boerse unit buys majority in EEX. Reuters.
  6. ↑ "Date Set For German Power Bourse Merger". Power Engineering International.
  7. ↑ Designing Global Emissions Trading - Annual Report 2016. EEX.
  8. ↑ About ECC AG. ECC.
  9. ↑ Press Release. ECC.
  10. ↑ Press Release. EEX.
  11. ↑ Press Release. EEX.
  12. ↑ Press Release. ECC.
  13. ↑ Press Release. EPEX.
  14. ↑ Press Release. EEX.
  15. ↑ Press Release. EEX.
  16. ↑ Press Release. BMU.
  17. ↑ Deutsche Boerse Annual Report 2014. Deutsche Boerse.
  18. ↑ Press Release. EEX.
  19. ↑ Deutsche Boerse 2016 Annual Report page 42. Deutsche Boerse.
  20. ↑ Press Release. EEX.
  21. ↑ Press Release. EEX.
  22. ↑ Austrian CEGH Exchange products launch on PEGAS. Press release.
  23. ↑ Austrian CEGH Exchange products launch on PEGAS. Press release.
  24. ↑ CEGH Hub Is The Reference Market. MondoVisione.
  25. ↑ EEX Group launches EEX Asia. EEX.
  26. ↑ Press Release. EEX.
  27. ↑ German EEX acquires majority stake in Powernext to strengthen gas. Platts.
  28. ↑ EEX set to acquire 100% ownership of US Nodal Exchange. Press Release.
  29. ↑ IncubEx and EEX to develop and expand global environmental and commodity markets. LeapRate.
  30. ↑ EEX and CBEEX partner for carbon market development in China. Hedgeweek.
  31. ↑ EEX Acquires 100 Percent of Grexel. Hedgeweek.
  32. ↑ ECC Completes Migration To C7 Clearing System. Press Release.
  33. ↑ EEX Group acquires commodities business of Nasdaq Futures, Inc. (NFX). EEX.
  34. ↑ Phelix Futures. EEX.
  35. ↑ Phelix Futures. EEX.
  36. ↑ EEX to launch full UK power curve next month. FOW.
  37. ↑ EEX Exchange Approves Product Expansion with British Power Futures. MondoVisione.
  38. ↑ PEGAS. EEX.
  39. ↑ Website. EEX.
  40. ↑ Website. EEX.
  41. ↑ Website. EEX.
  42. ↑ Emission Allowances Overview. EEX.
  43. ↑ Emission Allowances Secondary Market. EEX.
  44. ↑ EEX and Eurex expand cooperation to power derivatives – Phelix contracts also tradable for Eurex clients as of 25 November 2009. EEX.
  45. ↑ Coal. EEX.

Resources[edit]

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