Nasdaq to transfer European power business to EEX bourse (updated)

European Energy Exchange AG

20/06/2023 12:15

* 
      EEX to acquire Nasdaq's European power trading business
    

        * 
      Sweden's Nasdaq Clearing AB not part of the sale
    

        * 
      EEX plans changes to Nordic power market structure
    

  
 (Adds reasons for weak liquidity in Nordics, continental
Europe, paragraphs 12-13)
    By Vera Eckert and Nora Buli
       FRANKFURT/OSLO June 20 (Reuters) - Nasdaq  NDAQ.O  will
transfer its European power trading and clearing business to the
European Energy Exchange (EEX)  T3PA.DE , the U.S. exchange
operator and EEX announced on Tuesday.
    Nasdaq will transfer existing open positions in its Nordic,
French and German power futures as well as in European carbon
emission allowance futures (EUAs) to EEX clearing house the
European Commodity Clearing (ECC), it said in a statement.
    "We see the transaction as an opportunity for us to better
align our core strengths and strategic priorities with evolving
client needs," a Nasdaq spokesperson said.       
    The companies did not provide financial detail and the deal
is still subject to regulatory approvals.
    Sweden's Nasdaq Clearing AB is not part of the sale. It will
continue to own and operate services for Nordic equity
derivatives, fixed income derivatives and other European
financial derivatives contracts.
    EEX, Europe's leading electricity and natural gas exchange,
serves 800 participants.
    It is expanding its core products as well as its carbon,
freight, agricultural and hydrogen products, hoping to benefit
from synergies between different markets.    
    EEX European power futures trading in January-April 2023
totalled 1,373 terawatt hours (TWh), down 3% from a year
earlier. While Nordic power futures accounted for just 7.1 TWh
of that, volumes were down 42% from a year earlier.
        Nordic power trading volumes at Nasdaq were also down,
totalling 110.4 TWh, down 35% from a year earlier.
    EEX said it plans to change the structure of the current
Nordic power market and replace the Electricity Price Area
Differential (EPAD) contracts currently offered by Nasdaq with
zonal futures contracts, in line its continental European
offering.
    The Nordic power market consists of 12 bidding zones, but
financial contracts are settled against a Nordic system price.
EPAD contracts allow participants to hedge price differences
between a bidding zone and the system price.
    Nordic power contracts volumes have been in decline for a
number of years with liquidity squeezed by too few
counterparties in the individual zones as well as by diverging
area prices. 
        Last year also saw an excessive 
    market strain
     when prices soared due to the Russian gas supply crisis and
operators were left exposed to higher margin payment
requirements which discouraged trading.
  
        Nasdaq will inform the market about the timing of the
transfer of existing open position to EEX once required
approvals are received.

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Nasdaq Commodities Nordic Power Volumes    https://tmsnrt.rs/3Jpb4mN
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 (Reporting by Baranjot Kaur in Bengaluru, Vera Eckert in
Frankfurt and Nora Buli in Oslo; editing by Christina Fincher
and Jason Neely)
 ((Baranjot.Kaur@thomsonreuters.com; +91 86990 46242;))