datawatch Falling from a height the Impact of the Fiscal Cliff on the Energy Sector A pan-european natural gas market by EEX

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1 datawatch D ata n e w s f o r e n e r gy a n d c o m m o d i t i e s m a r k e t s December 2012 A pan-european natural gas market by EEX Worldwide Marine LNG Tracking HKEx completes LME acquisition EPA proposes modifications to MATS Falling from a height the Impact of the Fiscal Cliff on the Energy Sector Powered by:

2 December 2012 Editorial p. 3 Increasing crude oil production in Canada, supported by transportation infrastructure expansion in the U.S., is slowly emerging into a new market with more trading activities and new data products. Asia, with its high demand for fossil fuels, is another attractive target for exchanges and data vendors. Data News Power Markets p. 4 EEX Launches Power Day EEX Adds Bulgaria Generation Data NASDAQ OMX Launches New Genium INET Functionality and Products CME Delists ERCOT and MISO Products BRIX Launches Weekly Contracts Platts to Extend German Forward Curve Assessments Fossil Fuel Markets p. 5-9 CME Adds 352 Energy and Options Baltic Exchange Launches Weighted Forward Curves for Tanker FFAS Genscape Launches ARA Weekly Gasoil Storage Report Platts to Standardize Global Bunker Fuel Conversions Platts Launches US Gasoline Component Assessments Platts Launches North Asia Physical Bunkers ewindow Platts Starts Coal Freight Assessments CME Delists Oil and Natural Gas Platts to Cease Assessing Clean UKC-Med 30kt Platts to Suspend Publication of US Lube Postings EEX to Create a pan-european Natural Gas Market ASX Finalizes Disclosure Rules for Mining and Oil & Gas FERC to Improve Transparency in Natural Gas Market Price Genscape and Commodity Vectors: Worldwide LNG Tracking Extension of ICE NY Harbor Heating Oil and RBOB Gasoline Listing Cycle Expansion for CME Refined Products Platts Expands FC Assessments for US Refined Products datawatch Summary BM&FBOVESPA Trades New ETF ASX to Quote Australian Government Bonds New SPDR ETF Launched on Xetra Xetra Launches new ishared ETF Eurex Clearing Launches EurexOTC Clear for Interest Rate Swaps CBOE Introduces CBOE Low Volatility Index NYSE Euronext Expands Short Term Options Other Matters p Eurex Exchange Launches Advanced Derivative Trading System Wall Street Journal Launches MarketWatch Retirement Service Eurex Launches Securities Lending CCP Service IHS Adds New Content ASIC Changes Market Integrity Rules for Australia Bursa Malaysia Signs MoU with Shanghai Stock Exchange Singapore Broker to Enter ICE Europe Markets CFA and Eurex to Enhance Market Structure in China CBOE Holdings to Transition SPXpm from C2 To Hybrid Trading ZEMA Market Dashboard p. p Electricity DA Prices (ICE) Actual Temperature (AccuWeather) Electricity Price Forward Curves (ICE) EUA Forward Curve (ICE) Natural Gas Price Forward Curves (ICE) Natural Gas Spot Prices (ICE) Crude Oil Brent vs WTI Prompt-Month Contract (NYMEX) Forward Curve (NYMEX) News from Data Vendors p Argus Launches First Southeast Asian LNG Price Indication Argus Launches ANEA LNG Forward Swaps Assessments Argus Expands Coverage of Argus Latin American Markets Agriculture, Forestry and Metal Markets p. 10 HKEx Complete Acquisition of LME First ETFs Tracking Platinum and Silver Prices on HKEx CME Launches Implied Inter-Exchange KCBT-CBOT Spread CME Lists Aluminum MW U.S. Transaction Premium (Platts) RICI Index Adds NYSE LIFFE S Robusta Coffee and Cocoa FIS Launches OTC Options in NOLA Urea Fertilizer Market ICAP Launches Global Iron Ore Desk in London and Singapore ETFS Launches ETC on a Commodity Basket ex Agriculture and Livestock Environmental Markets and Weather Services p ICE EUA Auction Contract Auction Specifications ICE Reopens Emissions Daily and Launches Phase III Daily EEX to Auction Hungarian EUA Phase II EEX Launches CER Spot Market and Expands Carbix Index Private Companies Share Weather Data with NOAA EPA Proposes Slightly Modified MATS for New Power Plants Listing Cycle Expansion for CME Emission and Options FX, Interest Rates, Credit and Equity Indexes p ICE Introduces New FX Products CME Launches Interest Rate Swap S&P Dow Jones and TMX Launch Preferred Share Laddered and Equal Weight Sector Indices In Depth p Falling from a height the Impact of the Fiscal Cliff on the Energy Sector The energy sector has recently become a bastion of hope for the US. Despite the year-on-year growth in the shale gas and oil industries, continued bickering in Washington is causing serious concern over what consequences no compromise could have on the sector. Could a fall from the Fiscal Cliff at year-end burst the bubble for the sector or could the sector itself be the catalyst for keeping the economy afloat during stormy weather? Also, how dependent is growth in the green energy sector on a conclusive decision being made before December 31st? With the renewable energy Production Tax Credit (PTC) for wind up for debate in the New Year, what impact could the Fiscal Cliff have on this sector in more austere times? Finally what will be the wider global ramifications from the Fiscal Cliff, particularly across the water in Europe and Asia?

3 December 2012 datawatch Editor s letter The results of the US presidential elections brought us what they were expected to bring: more environmentally-focused policies on the horizon. Needless to say, promises of a balanced approach and the announcement of an all-of-the-above energy strategy have not removed questions over future US shale gas expansion and imports of Canadian oil from the tar sands. The decision on the fate of the $7 billion Keystone XL project is one of the most highly anticipated. As Obama delayed the decision until after the election, pressure from both sides reached a critical point. Senators are now calling on the president to stop procrastinating. Keystone XL opponents are marching outside the White House. Which side will end up winning is not clear yet. A decision on the approval of the pipeline will be a real test for the president, whose election campaign included seemingly contradicting and somewhat mutuallyexclusive promises of new jobs, an improved economy, energy independence and efforts to slow down climate change and address environmental concerns. Expansion of shale gas production is under pressure. Most likely, debates on shale gas regulations will extend well into 2013 and maybe after. Shale gas production is expected to see the adoption of best practices in well development and completion, as well as a requirement to disclose what ingredients have been used in hydraulic fracturing mixtures. The discussion on liquefied natural gas exports will likely hit obstacles posed by protectionists, who continue to raise concerns about the possible impacts of natural gas exports on domestic prices. While balancing the interests of environmental activists and oil producers by the president can be tricky, we can be sure of one thing: the environmental agenda is here to stay for the next four years. President Obama started off his second term with promises of taking more measures towards curbing climate change. He is already promising to double clean energy production and to remove carbon from the atmosphere. His administration has started to develop domestic energy production from resources available on the Outer Continental Shelf. At the end of November, Secretary of the Interior announced lease sales for renewable energy development in federal waters of the Atlantic Ocean. At about the same time, the Department of Energy awarded funding for Batteries and Energy Storage Hub in support of electric cars and renewable power generators. In the coming years we are likely to witness an even more active EPA. Pending regulations that have been dragging for some time will finally come to fruition. We will see the completion of the rule limiting mercury emissions from coal and oil-fired power plants. A GHG emissions standard for new fossil-fueled energy plants will see a final stage of reviews. Coal-ash regulations will also be approved and a cooling-water intake rule for thermal generating plants will likely be wrapped up by the summer of In addition to this, we are likely to see some low resistance from Congress in extending the wind PTC after its expiration at the end of What will all of this bring to those of us whose line of work involves dealing with the constant emergence of new data providers and the ever-growing number of market data reports? No doubt, weather forecasting will remain one of the main sources of expanding services and new data will set renewable power generation targets. Reduction of granularity of electricity scheduling will bring more challenges to analysts and will require a significant increase in data storage and processing capacity. More emission-reduction financial products will be introduced and public databases tracking the ingredients of fracking liquids will be added to the mix. Olga Gorstenko Editor Olga Gorstenko Phone: olga@ze.com Advertising & Vendor Relationships Bruce Colquhoun Phone: bruce.c@ze.com ZEMA Suite Inquiries Bruce Colquhoun Phone: bruce.c@ze.com Have an idea for an article or would like to contribute to an upcoming issue? Write to us at datawatch@ze.com To access previous issues of ZE DataWatch, go to

4 Power Markets EEX Launches Power Day On November 22, 2012, the European Energy Exchange (EEX) successfully launched trading in new short-term power derivatives, the Phelix Day and Weekend. Until 2pm CET a total of 720 MWh was traded in the new products. The first transaction for the Future for delivery on November 23 with a volume of 600 MWh was concluded between A2A Trading S.r.l. and Dynamic Energy ApS at a price of Euro/MWh. The new power derivatives complement the existing cash settled Phelix for Germany/Austria and close the gap between Spot and Derivatives Markets. EEX Code Description FB01 FB34 Phelix Base Day Future FWB1 FWB5 Phelix Base Weekend Future FP01 FP34 Phelix Peak Day Future FWP1 FWP5 Phelix Peak Weekend Future This following graph shows similar products to the Phelix Day traded on EEX. The products are Phelix Base Vs Load Weekly Future Contract: For EEX product specifications click here Data Source: EEX* EEX Expands Transparency Platform with Generation Data from Bulgaria On November 15, 2012, European Energy Exchange (EEX) announced they will expand the Transparency in Energy Markets platform with the publication of generation data from Bulgaria. This will result in power generation data from Bulgaria being available on the internet platform in the future. The first company to report power plant data from Bulgaria would be ČEZ Group and Windkraft Simonsfeld. As a result of this first step, a capacity of approximately 1,300 MW will be published on the platform. The companies are currently in the connection process and the first publication of Bulgarian generation data is scheduled for the first quarter of By reporting the data, companies will be able to use the Transparency in Energy Markets platform to implement their publication requirements under REMIT. Under this EU regulation, the market participants are required to disclose insider information which is relevant for pricing in power and natural gas trading. Furthermore, reporting of the data on the transparency platform also forms an important step in increasing transparency on the Bulgarian market and, thus, promoting its development. The quality and flexibility of the transparency platform promotes the fast and effective integration of data reported from further countries. Consequently, by using the transparency platform, EEX gives market participants throughout Europe the opportunity to fulfill their publication requirements under REMIT. NASDAQ OMX Launches New Genium INET Functionality and Products Effective November 26, 2012, Genium INET upgraded to version 0220 to include the following new features: German Day Future power contracts. Depending on the trading day, the number of tradable series will fluctuate between 3 and 9. Estonian CfDs Power Contracts. Covering 2 monthly, 3 quarterly and 3 yearly contracts; the Estonian forward curve will be referenced against the Estonian electricity spot price (EE), which is published by Nord Pool spot. Finnish and Swedish CfD Curve Extension. These curves will now cover 4 monthly, 4 quarterly and 4 yearly contracts. One-sided combinations. This new type of combination order facilitates trading of system price contracts and CfD contracts at the same time. Technical changes to the SPAN File. NASDAQ OMX Commodities SPAN-File will have an increase in the number of characters in the Priority Field from 3 to 6 in SPAN record type 11. This is a mandatory change. UK Spark Spread Enhancements. This functionality will be enhanced with the ability to match the Spark Spread combinations with the leg instruments. Trading Applications. The Go-Live version of Trading Workstation_r32111 can be found on the extranet and is available for download The most up-to-date documentation on Genium INET can be found on the member extranet: To learn more, click here. Platts to Extend German Forward Curve Assessments Platts has proposed to extend its 35% efficiency German dark spread and clean dark spread daily assessments by one year as a result of increasing liquidity at the far end of the curve effective January 7, The assessments, which play an important part in identifying hedging opportunities, would be published in Platts European Power Daily, Coal Trader International, on Platts European Power Alert and in Platts Market Data. Any feedback on the proposal should be sent to power@platts.com, cc: to pricegroup@platts.com by December 17,

5 Power Markets CME Delists ERCOT and MISO Products Effective December 3, 2012, NYMEX delisted 40 ERCOT and one MISO products: CME Description Code 2S ERCOT Houston 345 kv Hub 50 MW Peak Calendar-Day 3E ERCOT Houston 345 kv Hub 50 MW Off-Peak Calendar-Day 2T ERCOT North 345 kv Hub 50 MW Peak Calendar- Day 3F ERCOT North 345 kv Hub 50 MW Off-Peak Calendar-Day 2U ERCOT South 345 kv Hub 50 MW Peak Calendar- Day 3H ERCOT South 345 kv Hub 50 MW Off-Peak Calendar-Day 2V ERCOT West 345 kv Hub 50 MW Peak Calendar-Day 3J ERCOT West 345 kv Hub 50 MW Off-Peak Calendar-Day EHR ERCOT Houston Competitive Load Zone Real-Time 5 MW Peak EWR ERCOT West Competitive Load Zone Real-Time 5 MW Peak ERR ERCOT North Competitive Load Zone Real-Time 5 MW Peak EUR ERCOT South Competitive Load Zone Real-Time 5 MW Peak EHI ERCOT Houston Competitive Load Zone Real-Time 5 MW Off- Peak EWI ERCOT West Competitive Load Zone Real-Time 5 MW Off-Peak ERI ERCOT North Competitive Load Zone Real-Time 5 MW Off-Peak ESI ERCOT South Competitive Load Zone Real-Time 5 MW Off-Peak EHM ERCOT Houston Competitive Load Zone Real-Time 5 MW Peak Calendar-Day EWM ERCOT West Competitive Load Zone Real-Time 5 MW Peak Calendar-Day ENM ERCOT North Competitive Load Zone Real-Time 5 MW Peak Calendar-Day EUM ERCOT South Competitive Load Zone Real-Time 5 MW Peak Calendar-Day EHT ERCOT Houston Competitive Load Zone Real-Time 5 MW Off- Peak Calendar-Day EWT ERCOT West Competitive Load Zone Real-Time 5 MW Off-Peak Calendar-Day ENT ERCOT North Competitive Load Zone Real-Time 5 MW Off-Peak Calendar-Day EST ERCOT South Competitive Load Zone Real-Time 5 MW Off-Peak Calendar-Day EHD ERCOT Houston Competitive Load Zone Day-Ahead 5 MW Peak EWD ERCOT West Competitive Load Zone Day-Ahead 5 MW Peak ERD ERCOT North Competitive Load Zone Day-Ahead 5 MW Peak EUD ERCOT South Competitive Load Zone Day-Ahead 5 MW Peak EHY ERCOT Houston Competitive Load Zone Day-Ahead 5 MW Off- Peak EWY ERCOT West Competitive Load Zone Day-Ahead 5 MW Off-Peak ERY ERCOT North Competitive Load Zone Day-Ahead 5 MW Off- Peak EUY ERCOT South Competitive Load Zone Day-Ahead 5 MW Off- Peak EHC ERCOT Houston Competitive Load Zone Day-Ahead 5 MW Peak Calendar-Day EWC ERCOT West Competitive Load Zone Day-Ahead 5 MW Peak Calendar-Day ERC ERCOT North Competitive Load Zone Day-Ahead 5 MW Peak Calendar-Day EUC ERCOT South Competitive Load Zone Day-Ahead 5 MW Peak Calendar-Day EOH ERCOT Houston Competitive Load Zone Day-Ahead 5 MW Off- Peak Calendar-Day EWH ERCOT West Competitive Load Zone Day-Ahead 5 MW Off-Peak Calendar-Day ENH ERCOT North Competitive Load Zone Day-Ahead 5 MW Off- Peak Calendar-Day ETH ERCOT South Competitive Load Zone Day-Ahead 5 MW Off- Peak Calendar-Day CC MISO Indiana Hub (formerly Cinergy Hub) Calendar- Day Peak LMP (CC) To learn more, click here. There was no open interest in these contracts. BRIX Launches Weekly Contracts Effective November 21, 2012, BRIX launched contracts for weekly provision, a new energy trade format, for Conventional (fixed price), Conventional PLD + Premium and Fixed/Variable PLD Swap products. This will strengthen current trade strategies. Two of these strategies include: 1. PLD Hedge (weekly): many traders and generators manage their risks associated with variations in the Differences Settlement Price (PLD) by operating through the BRIX platform Fixed/Variable PLD Swap with monthly contracts. New weekly contracts will now accelerate the implementation of the same strategy since it will not be necessary to wait for PLD at a certain time of the month before transacting the Fixed/Variable PLD Swap for the whole month. 2. Modulation Arbitration: Conventional weekly contracts will permit participants (including generators, traders and consumers) to carry out a modulation arbitration of their profile, concentrating larger volumes at specific periods of the month. The new contracts are an important tool in managing BRIX participants energy portfolio. 5

6 Fossil Fuel Markets CME Adds 352 Energy and Options Effective December 16, 2012, 352 energy futures and options will be listed for trading on CME Globex pending regulatory review periods. These products will be available for customer testing in New Release starting on Monday, December 3.These contracts are listed with, and subject to, the rules and regulations of NYMEX. Settlement prices will be published for the synthetic futures to support customer options pricing models. The complete list of product names and codes are available here. See an example of the gasoline futures already traded on CME below: Baltic Exchange Launches Weighted Forward Curves for Tanker FFAS Effective November 8, 2012, Baltic Exchange launched an activity weighted forward curve for the tanker forward freight agreement (FFA) market in response to market demand. The new method of calculation considers the level of market activity each panel broker has assumed over a specific period and reflects this by weighting their submissions correspondingly. The result is a forward curve which better echoes actual market activity and experience, strengthening the position of the Baltic s forward curves, which serve mark-to-market purposes. Genscape Launches ARA Weekly Gasoil Storage Report On November 7, 2012, Genscape launched Amsterdam- Rotterdam-Antwerp (ARA) Weekly Gasoil Storage Report based on weekly tank-by-tank physical measurements. Applying the same measured data technological expertise used in its North American Cushing Oil Storage, Genscape strives to establish Europe s only weekly measurement of middle distillate physical inventories at storage terminals corresponding to the ICE Gasoil contract. While increasing transparency, this new report would particularity appeal to those who need access to the actual storage data of European oil. Data Source: CME* Argus Launches ANEA LNG Forward Swap Assessments On December 4, 2012, Argus launched a new series of northeast Asian LNG forward swaps assessments in the Argus LNG Daily report, known as ANEATM swaps. This highlights the growing liquidity in LNG derivatives, as well as industry demand for a reliable forward curve. They cover three forward-month periods from the furthest ANEA physical spot assessment meaning market participants can currently see the value of northeast Asian LNG swaps trading for March, April and May ANEA physical spot assessments represent cargoes delivered ex-ship (des) to ports in Japan, South Korea and Taiwan, trading 6-12 weeks before the date of delivery. It complements the Argus LNG Daily report s existing suite of Asia- Pacific and European spot price assessments, market commentary and global netback pricing. According to Adrian Binks, Argus Media chairman and chief executive, The LNG market is evolving at a rapid pace and the development of a financial derivatives market is key to enabling market participants to manage their risk effectively. The launch of ANEA forward swaps assessments in the Argus LNG Daily report provides stakeholders with transparency about the costs of hedging. *Graph created with ZEMA 6 In addition to a weekly PDF, web-based dashboard and data feed, Genscape provides historical tank-by-tank data and updates on tanks undergoing construction or maintenance. ARA weekly actuals aims to give subscribers a new tool to identify new tradable short-term opportunities by covering more than 1,000 ARA tanks which move 175 million tons of oil through this channel every year. Platts to Standardize Global Bunker Fuel Conversions On November 9, 2012, Platts announced plans for standardizing the conversion factors used for its global bunker fuel assessments. The factor for converting 180 CST and 380 CST bunker fuel assessments between metric tonnes and barrels would be The factor for converting marine diesel and marine gasoil assessments between metric tonnes and barrels would be The new assessments would come into effect from July 1, 2013, and would appear on Platts Global Alert, Bunkerwire and in the Platts price database.

7 Fossil Fuel Markets Platts Launches US Gasoline Component Assessments On December 3, 2012, Platts launched outright price assessments for US Gulf Coast alkylate, raffinate, and reformate. The spreads for each versus Platts US Gulf Coast, front-line 87 unleaded pipeline assessments prevailing at 3:15pm ET will also be published. Comments on Platts proposal to discontinue the existing alkylate, raffinate, and reformate differential assessments to the Platts US Gulf Coast Gasoline waterborne assessment is being accepted until February 1, The current differentials will continue to be published for now; however the proposal to discontinue the waterborne-based differential assessments, effective May 1, 2013, is being considered. Comments to with a cc to pricegroup@platts.com Platts Launches North Asia Physical Bunkers ewindow Effective November 16, 2012, Platts launched a new ewindow technology to assist Japan, South Korea, Hong Kong and Shanghai bunkers with the Market on Close assessment processes. Bids and offers by the participants in the Platts MOC assessment processes can be submitted though the ewindow software, which will then publish those bids and offers. The bids and offers can also be submitted to an editor, who would then publish them through the ewindow. Credit relationships that exist inside Platts assessment environment are expected to fully reflect relationships in the markets as a whole. Participants in the assessment process should advise Platts if any counterparty credit filters or restrictions need to be modified. Training on the new software is being offered by Platts. Feedback and comments can be sent to oilgroup@ platts.com Platts Starts Coal Freight Assessments On December 3, 2012, Platts launched coal freight rate assessments from the US East Coast to Rotterdam, Brazil, India and China, using Hampton Roads, US, to Praia Mole in Brazil, Paradip in India and Qingdao in China as a basis for normalizing freight rates. The assessments, which will be for Panamax vessels, will be added to the daily freight assessments for Australia-to- China and Australia-to-India routes.data Source: Argus* CME Delists Oil and Natural Gas Effective December 3, 2012, NYMEX delisted several oil and natural gas futures: CME Code QE 4E *Graph created with ZEMA Description New York Harbor Ethanol Gulf Coast Unl 87 (OPIS) 7 4F R9 W7 5P 5Q V1 S1 S3 S5 S6 S8 T1 RZ YU K5 Q3 To learn more, click here. Gulf Coast Unl 87 (OPIS) vs. RBOB Gasoline Spread Gulf Coast Jet (OPIS) Gulf Coast Jet (OPIS) vs. NY Harbor ULSD Heating Oil Gulf Coast ULSD (OPIS) Gulf Coast ULSD (OPIS) vs. Heating Oil Spread National Balancing Point (NBP) Henry Hub Basis Options Diesel 10ppm NWE Le Havre CIF NWE (Platts) Diesel 10ppm NWE Le Havre CIF NWE (Platts) vs. Gasoil Diesel 10ppm NWE Le Havre CIF NWE (Platts) vs. Gasoil BALMO Diesel 10ppm UK (Platts) CIF NWE Diesel 10ppm UK CIF NWE (Platts) vs. Gasoil Diesel 10ppm UK (Platts) CIF NWE vs. ICE Gasoil BALMO New York Harbor Conv. Gasoline (Platts) vs. RBOB Gasoline NY ULSD (Platts) Crack Spread Alberta Natural Gas Swing (Platts Gas Daily) Stanfield Natural Gas Swing (Platts Gas Daily) There was no open interest in these contracts. Platts to Cease Assessing Clean UKC-Med 30kt Effective May 1, 2013, Platts is proposing to cease assessing the value of United Kingdom/Continent-Mediterranean 30kt clean tanker freight rates, reflecting the significant changes in oil flow in the market and the less frequent chartering of this route. Platts Clean Tankerwire and Platts Global Alert page 558 currently publish the rates. Assessments and associated data to be discontinued from May 1, 2013 includes: Database Code PFALZ00 PFARL03 TCABT00 TCABT03 PFALZSZ Assessment Clean UKC-Med MR Worldscale Basis (30kt) Daily Clean UKC-Med MR Worldscale Basis (30kt) Monthly Average Clean UKC-Med MR $/mt (30kt) Daily Clean UKC-Med MR $/mt (30kt) Monthly Average Clean UKC-Med MR cargo size Platts to Suspend Publication of US Lube Postings Platts is seeking feedback on its proposal to suspend the publication of monthly posted prices for US lubricating base oils. The suspension would come into effect from March 1, Assessments would not be affected by the price suspension and lube values would continue to be assessed. US posted prices are currently published on Platts Global Alert pages 277, 278 and 279, and in the Platts market price database. Feedback should be sent to oilgroup@platts.com. Postings that will be suspended and their relevant codes can be found here:

8 Fossil Fuel Markets EEX and Powernext to Create a pan-european Natural Gas Trading Market On November 6, 2012, European Energy Exchange (EEX) and Powernext SA signed a Memorandum of Understanding to combine their natural gas market activities and pool their respective expertise to create a pan-european gas market. This project is subject to the customary regulatory and competition approvals. Depending on the due completion of the relevant regulato ry and competition requirements, the EEX and Powernext gas cooperation should go live in the first quarter of To facilitate natural gas trading, they will offer the market participants all gas products on a joint Trayport platform as it meets the requirements of the gas trading community and has already been used by Powernext since In the framework of their cooperation, EEX and Powernext will remain two separate gas exchanges and will not create a joint venture. In the future, they are planning to launch other European gas products together on the joint trading platform. Our aim is to deliver a unique pan-european gas offering focused on the physical and financial needs of the trading community, said Peter Reitz, Chief Executive Officer of EEX. We are building on our long-standing and successful cooperation in power trading. This is a very logical step for both our organizations. Moreover, we believe that, together, we have a convincing proposal for the participants in the gas sector, according to Jean- François Conil-Lacoste, CEO of Powernext. In addition, he said it will benefit the integration of the European gas markets through the introduction of cleared geographical spread products. Elliott Piggott, CEO of Trayport, said: We are extremely pleased that EEX and Powernext have selected our proven trading platform for this challenging initiative. The Trayport team will provide the highest level of support to make this cooperation a success. As a result of the integration of the products within one system, joint spread products will be offered for trading: NCG/TTF, PEG Nord/TTF, GASPOOL/NCG, PEG Sud/PEG Nord, GASPOOL/TTF and PEG Nord/NCG. Clearing and settlement of all transactions will be provided by Europe s leading energy clearing house, European Commodity Clearing AG (ECC). The new requirements promote greater confidence and support for ASX-listed mining and oil and gas companies while also improving them. To see compliance requirements, please click here. ASX-listed mining and oil and gas companies will be provided with a 12-month transition period, with the new rules coming into effect on 1 December FERC to Improve Transparency in Natural Gas Market Price On November 15, 2012, FERC initiated a Notice of Inquiry which is to investigate whether or not quarterly reporting of FERCjurisdictional next-day and next-month transactions under the Natural Gas Act are necessary for improving price transparency in the wholesale natural gas market. Measures facilitating price transparency are currently in place; however, areas where additional transparency may be helpful to market participants in deterring market manipulation have recently been identified. Often, the information used to produce the prices reported to the various indices is aggregated and lacks transparency. FERC asks questions on how best to enhance price transparency and surveillance of gas markets aims to increase confidence in these indices, and assure participants that prices are a result of fundamental supply and demand. Comments can be made to the Federal Register 60 days from publication of the notice. Further information can be found here. Genscape and Commodity Vectors to Deliver Worldwide Marine LNG Tracking On November 20, 2012, Genscape announced a new strategic partnership with Commodity Vectors, a UK and Ireland-based commodity research firm. Genscape provides its patented and largely land-based energy monitoring expertise to Commodity Vector s proprietary maritime analysis technology to deliver a more complete picture of real-time energy flows, both on land and sea worldwide. This joint partnership aims to bring a whole new level of market transparency to oceangoing bulk energy commodities. ASX Finalizes Disclosure Rules for Mining and Oil & Gas Companies On November 8, 2012, ASX introduces new listing rules to enhance disclosure of reserves and resources by ASX-listed mining and oil and gas exploration and production companies after receiving regulatory approval. The new initiatives include: Enhanced reserves and resources reporting Improved flexibility for small to mid-cap companies to raise additional capital Streamlined timetables for rights issues On-market bookbuild facility Equity research scheme for small to mid-cap companies Revised and updated listing rule guidance notes, particularly for continuous disclosure. *Graph created with ZEMA 8

9 Fossil Fuel Markets Extension of ICE NY Harbor Heating Oil and RBOB Gasoline Effective October 31, 2012, the ICE Heating Oil futures and the ICE RBOB Gasoline futures contract listing has been extended up to 48 consecutive months and 36 consecutive months respectively. See below an example of January 2013 future contract traded on ICE: JU Gulf Coast Jet (Argus) Up-Down KL Los Angeles CARB Diesel (OPIS) vs. NY Harbor ULSD Heating Oil US Gulf Coast ULSD (Argus) Up- Down UT Gulf Coast No. 2 (Platts) Up- Down Financial These contracts are listed with, and subject to, the rules and regulations of NYMEX. Platts Expands Forward Curve Assessments for US Refined Products Data Source: ICE* Listing Cycle Expansion for CME Refined Products On December 3, 2012, Platts confirmed the expansion of existing curves for US Gulf Coast unleaded gasoline, heating oil, jet fuel, ULSD, Atlantic Coast jet fuel, West Coast jet fuel and West Coast CARBOB by an additional eight calendar months. Curves for US Gulf Coast 3% sulfur residual fuel oil and Atlantic Coast 1% sulfur fuel oil will also have an additional eight months added. NYMEX RBOB and heating oil frontline swaps and NYMEX WTI frontline swaps are being extended to 36 calendar months. New forward curve assessments consisting of 36 calendar months for Dubai and Brent frontline swaps at the Americas Market on close of 3:15 pm ET are also being launched by Platts. For the list of products and pages click here. On December 3, 2012, the listing cycle for the following energy futures was expanded on CME Clearport and open outcry as follows: CME Code 5C A6 1U CRE 7Y UY YH MQ JS Product Description Chicago ULSD (Platts) vs. NY Harbor ULSD Heating Oil Current Listed Month Last listed December 12 Group Three ULSD (Platts) vs. NY Last listed Harbor ULSD Heating Oil March 13 NY Jet Fuel (Platts) vs. NY Harbor Last listed ULSD Heating Oil March 13 NY Jet Fuel (Argus) vs. NY Harbor VX ULSD Heating Oil NY ULSD (Argus) vs. NY Harbor ULSD Heating Oil NY ULSD (Platts) vs. NY Harbor ULSD Heating Oil NY Heating Oil (Platts) vs. NY Harbor ULSD Heating Oil Los Angeles Jet Fuel (Platts) vs. NY Harbor ULSD Heating Oil Los Angeles Jet (OPIS) vs. NY Harbor ULSD Heating Oil Last listed December 12 Last listed March 13 New Listing Cycle Current Year + 2 Years Current year + 1 year Current year + 2 years 9

10 Agriculture, Forestry and Metal Markets HKEx Complete Acquisition of LME RICI Index Adds NYSE LIFFE S Robusta Coffee and Cocoa Effective December 6, 2012, the acquisition by Hong Kong Exchanges and Clearing Limited (HKEx) of LME Holdings Limited (LME Holdings) was finalized, bringing Asia s leading operator of exchanges and clearing houses together with the world s foremost non-ferrous base metals exchange. The acquisition provides infrastructure and resource benefits to both companies. LME Holdings is the parent company of The London Metal Exchange (LME). First ETFs Tracking Platinum and Silver Prices on HKEx On November 28, 2012, Hong Kong Exchanges and Clearing Limited (HKEx) listed three precious metals- related Exchange Traded Funds (ETFs) on the Stock Exchange of Hong Kong Limited (the Exchange), including the Exchange s first silver and platinum ETFs. According to HKEx, the ETFs will be the first three launched by ETF Securities (Hong Kong) Limited on the Exchange, a wholly-owned subsidiary of HKEx. All three ETFs - ETFS Physical Gold ETF, ETFS Physical Silver ETF and ETFS Physical Platinum ETF are designed to track the London benchmark prices of the respective metals. CME Launches Implied Inter- Exchange KCBT-CBOT Spread On December 10, 2012, CME listed the implied inter-exchange KCBT-CBOT Wheat futures spread (tag1151-securitygroup=ke, tag 55-Symbol=KB, tag 207-SecurityExchange=KBCB) will be listed on CME Globex. The inter-exchange spread will use the value IS in tag 762-Security SuybType For Implementation Specification click here CME Lists Aluminum MW U.S. Transaction Premium (Platts) Effective December 16, 2012, the Aluminum MW US Transaction Premium (Platts) futures (tag-1151 SecurityGroup=AUP, tag 55-Symbol=ST) is listed for trading on CME Globex. This contract is listed with, and subject to, the rules and regulations of COMEX. They are currently available for customer testing in New Release. Each contract is 55,116 lbs (25MT) and priced in US dollars and cents per pound and based on the monthly average of Platts Aluminum MW US Transaction Premium Assessment. It is design to help North American Aluminum commercial market participants to hedge their Aluminum Midwest premium risk exposure. On November 12, 2012, Rogers International Commodity Index (RICI) announced plans to add NYSE Liffe s Robusta Coffee and Cocoa futures contracts at the end of January The new contracts will replace the existing Intercontinental Exchange s Arabica Coffee and Cocoa contracts and will give NYSE Liffe s Robusta Coffee and Cocoa contracts weightings of 2% and 1% respectively. The index was designed to meet the need for consistent investing in a broad-based international vehicle; it represents the value of a basket of commodities consumed in the global economy, ranging from agricultural to energy and metals products. The value of this basket is tracked via futures contracts on 37 different exchange traded physical commodities, quoted in five different currencies, (soon to be six with Sterling) listed on 12 exchanges in five countries, the company added. FIS Launches OTC Options in NOLA Urea Fertilizer Market Effective December 13, 2012, Freight Investor Services (FIS) launched an over-the-counter options contract with bilateral settlement in the NOLA Urea fob fertilizer market. As the market is highly volatile, with all stakeholders exposed to price risk, it makes it an ideal platform for introducing fertilizer options. The benefit to traders and hedgers is that the maximum loss will not exceed the cost of the premium. Contract Specifications are for Urea (gran) per short tonne, fob barge NOLA. LCH.Clearnet, the London London-based clearing house, will clear the NOLA Urea fob fertilizer options contract. Traders requested an additional counterparty risk management capability and LCH.Clearnet have a history of firsts in freight and commodity derivatives clearing. The contract specifications are for Urea (gran) per short tonne, fob barge NOLA, with clearing provided via LCH. Clearnet. ICAP Launches Global Iron Ore Desk in London and Singapore On November 6, 2012, a new global iron ore desk based out of London and Singapore was launched by ICAP plc, with brokers at each location working closely with coal, dry Forward Freight Derivative (FFA) and base and precious metal desks within ICAP. The new desk is a result of the introduction of a spot market, which has caused an increase in the volumes of iron ore swaps and options being traded over the past 18 months. Iron ore was traditionally sold using annual fixed price contracts; however the breakdown of the old system in favor of the new spot market appeals to end users and banks and traders as a hedging tool. *Graph created with ZEMA 10

11 Agriculture, Forestry and Metal Markets ETFS Launches ETC on a Commodity Basket ex Agriculture and Livestock On November 29, 2012, ETFS Commodity Securities Limited issued a further ETC (Exchangeable Traded commodity) that has been tradable on Xetra. ETC name: ETFS Ex-Agriculture and Livestock DJ-UBSCI Asset class: commodity basket ISIN: DE000A1RX1P2 Management fee: 0.49 percent Benchmark: DJ-UBS Commodity ex-agriculture and Livestock Index This enables investors to participate for the first time in the performance of a commodity basket excluding the agricultural and livestock sectors. The ETC tracks the performance of the commodity future from the energy, industrial metals and precious metals sectors. 11

12 Environmental Markets and Weather Services ICE EUA Auction Contract Auction Specifications On November 20, 2012, ICE published the Auction specifications for the ICE EUA Auction Contract. The Auction terms remain unchanged; the Auction volumes are as following: November 21, 2012: 6,500,000 EUA December 5, 2012: 5,758,000 EUA For Auction Specification click here. For Contract Specification click here. ICE Reopens Emissions Daily Market and Launches Phase III Daily On December 10, 2012, ICE Europe reactivated its spot emissions market after trade was frozen for nearly two years due to cyber thefts on a number of EU CO2 registries. The exchange reopened its daily futures market Certified Emissions Reductions (CER) and EU Allowances (EUA) from the second phase of Europe s Emissions Trading Scheme. Also, ICE launched daily futures for EUAs from the scheme s third phase ( ). After cyber criminals hacked into several national emissions registries between 2010 and 2011 and stole more than 3 million carbon permits, ICE suspended spot trade early last year. On the same date, ICE Europe introduced a new daily futures contract for Phase III EU Allowances. The Phase II and III EUA daily futures and the CER daily futures contract are physically deliverable and represent a lot size of 1,000 emission allowances and 1,000 certified emission reduction units respectively. Each EUA and CER represents an entitlement to emit one tonne of carbon dioxide equivalent gas. The daily futures contracts will expire on a daily basis. ICE Code ECX EUA Daily EUA Phase- 3Daily ECX CER CRE 7Y UY YH Description ICE EUA Phase II Daily Contract ICE EUA Phase III Daily Contract ICE Certified Emission Reduction Units (CER) Daily Contract NY Jet Fuel (Argus) vs. NY Harbor ULSD Heating Oil NY ULSD (Argus) vs. NY Harbor ULSD Heating Oil NY ULSD (Platts) vs. NY Harbor ULSD Heating Oil NY Heating Oil (Platts) vs. NY Harbor ULSD Heating Oil The following graph shows the ICE EUA Phase II Daily Contract and ICE Certified Emission Reduction Units (CER) Daily Contract: For contract specification click here Data Source ICE* EEX and Hungary Signed Contract for Auctioning of EUA Phase II OOn November 28, 2012, the European Energy Exchange (EEX) successfully completed a contract agreement with the Hungarian Ministry of National Department for the auctioning of EU Emission Allowances (EUA) for the second trading period of the EU ETS. The volume of 2.5 million EUA will be auctioned on the EEX Sport Market in two tranches of 1.25 million EUAs each. The auction is to take place on December 17 and 20, 2012 with the bidding window open from 1pm to 3 pm CET. The Hungarian Ministry of National Development which has recently been admitted as auctioneer for Phase III auctions on EEX as the common transitional platform will also assume the role as auctioneer for the monetization of EUAs of Phase II. For EEX Auction calendar click here EEX Launches CER Spot Market and Expands Carbix Index On November 20, 2012, the European Energy Exchange (EEX) expanded the CO2 secondary market with spot contracts on Grey Certified Emission Reductions (Grey CER) and Green Certified Emission Reductions (Green CER). In addition, EEX re-launched Carbix CO2 index for the Spot Market. The CER are issued for Clean Development Mechanism (CDM) projects which industrialized countries carry out in developing countries to reduce their emissions. The Grey CER product will be comprised of certificates from all projects involving the destruction of trifluoromethane (HFC-23) and nitrous oxide (N2O) from adipic acid production. The Green CER product covers all projects which can be used at the respective delivery day for means of compliance according to the valid rules of EU ETS. These contacts are offered by EEX starting December 5, 2012, with a fee holiday for exchange trading fees until the end of the first quarter of 2013 and are subject to the approval of the Exchange Council. 12

13 Environmental Markets and Weather Services EEX Code GREC DCER Description Green Certified Reduction Units Certified Reduction Units (Grey) Starting December 5, 2012, EEX also re-launched Carbix CO2 as an index of the CO2 index family (referred to as the European Carbon Index ECarbix ) on a daily basis, as well as a monthly average value. Considering the primary and secondary market, all calculations are based on a weighted volume of transactions on the spot market. EEX starts with the introduction of an ECarbix (EUA). The following graph shows the Carbix CO2 emission allowances traded on EEX: For contract Specification click here Data Source EEX* Listing Cycle Expansion for CME Emission and Options On December 3, 2012, the listing cycle for the following emission futures and options was expanded as follows: Product In Delivery Month European Union Allowance (EUA) In Delivery Month European Union Allowance (EUA) Option CME Security Group CME Symbol Current Listed Months EAF VX December 2012; December EAX GY New Listing Cycle First three consecutive contracts months plus eight quarterly contracts on a rolling basis, starting with the nearest quarter; December contract month of subsequent years through In Delivery Month European Union Allowance (EUA) Serial Option In Delivery Month Certified Emission Reduction (CER) In Delivery Month Certified Emission Reduction (CER) Option Certified Emission Reduction Plus(CERplus) Emission Reduction Unit (ERU) Emission Reduction Unit (ERU) Option 9G GY None First three consecutive contracts months plus eight quarterly contracts on a rolling basis, starting with the nearest quarter; December contract month of subsequent years through CRE VX December 2012 CRY GY CPL VX December 2012; December REU VX December 2012; March 2013 ERO GY December 2012, March 2013 First three consecutive contracts months plus eight quarterly contracts on a rolling basis, starting with the nearest quarter; December contract month of subsequent years through First three consecutive contracts months plus eight quarterly contracts on a rolling basis through March These contracts are listed with, and subject to, the rules and regulations of NYMEX. An example of the CPL December 2013 futures contract currently traded on CME is shown below. 13

14 Environmental Markets and Weather Services EPA Proposes Slightly Modified MATS for New Power Plants Data Source- CME* Private Companies Share Weather Data with NOAA On November 14, 2012, two of the nation s largest producers of wind-generated electric power shared privately-collected weather data with NOAA, providing agency scientists with additional observations from wind farms across the nation for research and operations. Iberdrola Renewables of Portland, OR, and NextEra Energy Resources of Juno Beach, FL, signed an agreement to share data with NOAA. The companies promised to share valuable weather observations from instrumented towers in their wind farms and wind speed data from instruments atop wind turbines. These observations are used in operational model forecasts produced by NOAA s National Weather Service. Wind data at these heights are not routinely observed and are of great interest to many industries and researchers involved in renewable energy, aviation, and air quality. On November 20, 2012, the U.S. Environmental Protection Agency (EPA) slightly weakened emission limits for mercury, particulate matter (PM), acid gases, and certain individual metals for future coal- and oil-fired power plants. The proposal was based on new information and analysis that became available to the agency after the Mercury and Air Toxics Standards (MATS) and Utility New Source Performance Standards (NSPS) were finalized on December 16, Later this year, the EPA received 20 petitions for reconsideration of the MATS and four for reconsideration of the utility NSPS. Petitioners raised concerns associated with measurement issues related to mercury and the data set to which the variability calculation was applied when establishing the new source standards for PM and hydrochloric acid (HCl). The objections was the agency did not base the sulfur dioxide (SO2) standard on a regulated utility unit and had finalized startup and shutdown provisions before the public had a chance to review and comment on them. The new proposal does not change final emission limits for existing power plants, but the changes to new source emission limits for filterable PM and HCl apply to new coal-fired generating units, and changes for filterable PM apply to new solid oil-derived fuel-fired generating units. Also, the proposal aims to revise the SO2 limit for solid oil-derived fuel-fired generating units, the filterable PM limit applicable to continental liquid oil-fired generating units, and the lead and selenium limits applicable to coal-fired generating units. The rule is expected to be finalized in March 2013, following a 30-day comment period after publication in the Federal Register. 14

15 FX, Interest Rates, Credit and Equity Indexes ICE Introduces New FX Products On November 26, 2012, Intercontinental Exchange (ICE) announced it will launch two new cash-settled foreign exchange futures contracts on ICE US for the trade date of January 28, The contracts will be listed on the ICE platform and are eligible for the waiver of exchange and clearing fees for electronicallyexecuted currency pair futures which extends into The contracts also are available for exchange-for-physical (EFP) transactions and block trading. There are no EFP surcharges beyond the standard exchange and clearing fees of $0.30 per contract side for emerging market currencies. S& P Dow Jones Indices and TMX Launch Preferred Share Laddered and Equal Weight Sector Indices On November 19, 2012, S&P Dow Jones Indices and TMX Group Inc launched three new Canadian Indices including: S&P/TSX Preferred Share Laddered index, the S&P/TSX Equal Weight Global Gold index and the S&P/TSX Equal Weight Industrials index. Each of the indices has been licensed to BMO Asses Management for potential exchange traded products to be listed on Toronto Stock Exchange. The indices were created to fill the needs for industry specific indices that are liquid enough to serve as the basis for investment products and relevant enough to serve as key benchmarks of performance. ICE Code Description Contract Size KIU Indian Rupee / U.S Dollar 2,000,000 Rupee KBX Brazil Real / U.S. Dollar 100,000 Real For Product Specification click here Index Code TXPL TXGE TXIE Description S&P/TSX Preferred Share Laddered Index S&P/TSX Equal Weight Global Gold Index S&P/TSX Equal Weight Industrials Index CME Launches Interest Rate Swap On December 3, 2012, CME listed USD Interest Rate Swap futures for trading on CME Globex. The futures will be listed for quarterly expiration on IMM dates, for physical delivery of OTC US dollar interest rate swaps at key terms to maturity (2, 5, 10 and 30 years). Contracts will be quoted on a price basis, with a fixed coupon for each contract that is set by the Exchange when the contract is listed for trading. At expiration, the holder of a long futures position will become the fixed rate receiver and floating rate payer in an OTC interest rate swap cleared by CME Clearing. The contracts are subject to the rules and regulations of CBOT CME Code B1U N1U F1U T1U ZB ZN ZF ZT I3 SR SA Description 30-Year USD Interest Rate Swap 10-Year USD Interest Rate Swap 5-Year USD Interest Rate Swap 2-Year USD Interest Rate Swap 30-Year Treasury Bond vs. 30-Year USD "Deliverable" Interest Rate Swap 10-Year Treasury Note vs. 10-Yr USD "Deliverable" Interest Rate Swap 5-Year Treasury Note vs. 5-Year USD "Deliverable" Interest Rate Swap 2-Year Treasury Note vs. 2-Year USD "Deliverable" Interest Rate Swap 30-Year "Financial" Swap vs. 30-Year USD "Deliverable" Interest Rate Swap 10-Year "Financial" Swap vs. 10-Year USD "Deliverable" Interest Rate Swap 5-Year "Financial" Swap vs. 5-Year USD "Deliverable" Interest Rate Swap For S&P/TSX Indices Specification click here BM&FBOVESPA Trades New ETF On November 12, 2012, BM&FBOVESPA made a new exchangetraded fund (ETF) called CAIXA ETF Ibovespa Index Fund (ticker: XBOV11) available for trading on BM&FBOVESPA. XBOV11 is indexed to the Bovespa Index - Ibovespa, which tracks the performance of the shares issued by leading electric, water and sewage, and gas utilities. To learn more about Bovespa Index Ibovespa please click here ASX to Quote Australian Government Bonds On November 1, 2012, Australian Securities Exchange (ASX) got a step closer to the quoting of Australian Government Bonds on a securities exchange, after the senate passed the Commonwealth Government Securities Legislation Amendment (Retail Trading) Bill. By enabling retail access to exchange-traded government bonds, Australia s savings pool will be diversified while: volatility is reduced; the country s economic competitiveness will be improved; and there will be greater domestic savings for investment in local infrastructure and corporate expansion. Trading is expected to commence in the first half of 2013, subject to regulatory clearance. For Contract Specification click here 15

16 FX, Interest Rates, Credit and Equity Indexes New SPDR ETF Launched on Xetra On November 20, 2012, SPDR (State Street Global Advisors) issued a new exchange-listed equity index fund that has been tradable on Xetra ever since. ETF name: SPDR BofA Merrill Lynch Emerging Markets Corporate Bond UCITS ETF Asset class: bond index ETF ISIN: IE00B7LFXY77 Total expense ratio: 0.50 percent Distribution policy: distributing Benchmark: BofA Merrill Lynch Emerging Markets Diversified Corporate ex-144a Index First time investors can participate in the performance of emerging market corporate bonds denominated in US dollars. All bonds admitted to the reference index have an outstanding volume of at least USD 500 million and a residual maturity of at least one year, and must also represent senior and secured corporate debt issued in the US or Europe. The index currently comprises bonds from companies located in Argentina, Bahrain, Barbados, Brazil, China, Colombia, Costa Rica, Egypt, Hong Kong, Indonesia, Israel, Jamaica, Kazakhstan, Korea, Kuwait, Malaysia, Mexico, Nigeria, Peru, Russia, Saudi Arabia, Singapore, South Africa, Thailand, Trinidad, Turkey, the UAE, Ukraine and Venezuela. Xetra Launches New ishared ETF On November 28, 2012, Deutsche Borse XTF launched three new bond index ETFs and one new equity index ETF issued by ishares. Product Asset Class ishares Global Government AAA- Bond index ETF AA Capped Bond ishares Global Corporate Bond Bond index ETF ishares Barclays Capital Euro Corporate Bond index ETF Bond Interest Rate Hedged ishares MSCI Mexico IMI Capped Equity index ETF The following graph shows similar products to the newly released Bond Index ETF. The products are 30 year US Treasury Bond and the Long-term US Treasury Bond. For product specification click here Data Source CME* Eurex Clearing Launches EurexOTC Clear for Interest Rate Swaps On November 13, 2012, EurexOTC Clear for Interest Rate Swaps (IRS) went live. The launch got support from Eurex Clearing s cooperation banks Barclays, Citigroup Global Markets Ltd., Credit Suisse, Deutsche Bank and JP Morgan. In addition, Commerzbank, HSBC, Royal Bank of Scotland, UBS and Basler Kantonalbank joined the service for the production start. All ten members have successfully cleared their first transactions via EurexOTC Clear for IRS. BNP Paribas, Goldman Sachs, Morgan Stanley, Nomura, NORD/LB, Société Générale and further market participants are preparing to join the service as clearing members. The support from major OTC dealers and Eurex Clearing s timely launch facilitated preparations for the onboarding of buy-side clients ahead of the start of the clearing obligation in Europe, which is anticipated to commence in the second half of This new clearing service is intended to deal with the needs of clients focusing on safety and efficiency. Eurex Clearing s segregation solution the Individual Clearing Model offers protection and portability with full individual segregation of positions and customer collateral as well as delivers capital efficiencies to promote cost efficient compliance with the new regulatory requirements. Hester Serafini, Head of Europe and Asia OTC Clearing at JP Morgan confirmed: To deliver the full benefits to buy-side clients the industry needs to have Client Clearing Documentation finalized. Eurex Clearing together with major market participants is very engaged in this industry effort. With its new service EurexOTC Clear for IRS, Eurex Clearing will fully integrate the clearing and collateralization of OTC and listed derivatives in a single clearing house within one single framework. The new service, which will be further expanded in 2013, is one important element of Eurex Clearing s comprehensive roadmap in preparing for the changing regulatory environment. 16

17 FX, Interest Rates, Credit and Equity Indexes CBOE Introduces CBOE Low Volatility Index On November 30, 2012, CBOE began disseminating values for a new benchmark index, the CBOE Low Volatility Index (LOVOL). The CBOE LOVOL Index is designed for investors whose preferences have shifted from investing in riskier assets to lowervolatility assets. The new index aims to provide investors with the ability to replicate an investment strategy which is subject to less downside volatility in a portfolio of S&P 500 stocks, while still preserving the bulk of market gains. The CBOE LOVOL Index is a blend of the CBOE S&P 500 BuyWrite Index and the CBOE VIX Tail Hedge IndexSM. The CBOE LOVOL Index measures the performance of a portfolio that overlays SPX and CBOE Volatility Index calls over the S&P 500 Index. LOVOL Index value is disseminated every 15 seconds during the trading day. NYSE Euronext Expands Short Term Options On November 15, 2012, NYSE Euronext s U.S. options exchanges, NYSE Amex and NYSE Arca, announced that they are the first exchanges to receive SEC approval to expand the listing and trading of their Short Term Option Series program from a single week to five consecutive weeks. The products will be available as follows: AAPL, BAC, BP, C and XLF on NYSE Arca Options and EEM, GLD, IWM, QQQ, and SPY on NYSE Amex Options. NYSE Amex was the first exchange to be approved to list and trade Short Term Option Series on single stocks and exchangetraded funds (ETFs) on June 4, Weekly options trading on both NYSE Amex and NYSE Arca accounted for over 223 million contracts traded since inception. These options exchanges present a compelling dual market structure with the choice of price-time priority on NYSE Arca Options or the traditional market-maker model and expanded array of services of NYSE Amex Options. 17

18 Other Matters Eurex Exchange Launches Advanced Derivative Trading System On December 4, 2012, Eurex Exchange launched advanced trading system which benefits participants in significantly better performance, more choice and enhanced functionalities all based on Eurex Exchange s reliability. The roll out started with property, inflation and weather derivatives, a total of 24 products. The production launch will be followed by a product migration phase in a stepwise approach; next phase is scheduled for February. Full roll-out is expected to conclude in May Its key features include: Based on Deutsche Börse Group s global trading architecture, Offers greater system flexibility, allowing for reduced timeto-market when introducing new financial products and new functionalities, Latency reduced to minimum due to high performance messaging architecture allowing faster communication, Includes enhanced calendar spreads, user-defined strategies and streamlined processing and reporting. Jürg Spillmann, member of the Eurex Executive Board and responsible for IT & Operations, said this next generation system will substantially change the way traders and investors access the world s most dynamic markets, adding it will establish a clear competitive advantage for their participants. Wall Street Journal Launches MarketWatch Retirement Service On November 14, 2012, The Wall Street Journal Digital Network launched a section on MarketWatch.com called MarketWatch Retirement, the Network s free portal for market news, investment ideas and personal finance. It will feature online news, advice and analysis targeted towards people saving for retirement. The new section is vowed to be one of the most comprehensive resources for retirement news and information on the web. With an estimated 15 million unique visitors per month, MarketWatch Retirement said it will be an indispensable resource for people to make thoughtful and timely decisions to maximize their resources for retirement days. Eurex Launches Securities Lending CCP Service On November 22, 2012, Eurex Clearing launched Europe s first central counterparty (CCP) service for the bilateral securities lending market, in partnership with Pirum Systems and Clearstream Banking. The new CCP service holds the key features of the Overthe-Counter market for both lending and borrowing counterparties. The clearing house as single counterparty to all trades reduces counterparty risk exposure and eliminates the need for multiple credit evaluations. Thomas Book, member of the Eurex executive board and responsible for clearing, said: Our new clearing offering for securities lending has been designed with support from key market participants who have committed to utilize the service to achieve a substantial reduction in capital allocation. We have completed testing of our offering and are ready to start a pilot phase with our early adopters. Our set-up will enable customers to make use of their existing connectivity to these dynamic service providers for trade and collateral management and to take the benefit of substantial improvements to the current market structure by delivering significant capital and operational benefits to all participants, added Book. IHS Adds New Content On November 6, 2012, Information Handling Services, Inc. (IHS) announced the addition of IHS content including IHS Standards Expert - the industry-leading standards management solution, to IHS Goldfire s expansive collection of pre-indexed technical knowledge. IHS Goldfire utilizes semantic technologies that allow engineers and other technical personnel to find relevant answers across multiple languages identify insights across disparate data sources, and locate experts both inside and outside their organizations in order to rapidly make more informed product decisions. Chad Hawkinson, Vice President of Product Design at IHS said: With the addition of IHS Standards Expert, IHS Goldfire gives engineers the ability to quickly search across more than 1.6 million standards, codes, specifications, and related publications to identify current accepted best practices for engineering technologies that affect product or process design and development. ASIC Changes Market Integrity Rules for Australia On November 21, 2012, Australian Securities & Investments Commission (ASIC) made new market integrity rules to address risks emerging from developments in market structure, including growth in automated trading and the changing nature of dark liquidity. These new rules tend to balance the need for additional regulation to address the changes in the equities markets without succumbing to the unsubstantiated hysteria that has plagued the public debate on these issues in recent months. The rules will be phased in over 18-month period. For the ASIC Market Integrity Rules click here. Singapore Broker to Enter ICE Europe Markets On November 29, 2012, Intercontinental Exchange (ICE) announced that a number of Singapore ICE Block Broker Exchange Participants can have access to ICE Block to enter Block Trades, as long as they hold a Capital Market Services (CMS) License, as required by Monetary Authority of Singapore pursuant to requirements under Section 82(1) of the Securities and Act (CAP. 289). 18

19 Other Matters Bursa Malaysia Signs MoU with Shanghai Stock Exchange On November 16, 2012, Bursa Malaysia Berhad (Bursa Malaysia) and Shanghai Stock Exchange (SSE) signed a Memorandum of Understanding (MoU) to pursue a continuing relationship for the mutual benefit of the financial services industry in Malaysia and China. Based on the MoU, SSE and Bursa Malaysia have agreed to facilitate the development of communication channels for the sharing of information between both exchanges. This agreement covers aspects such as structuring of listed products, development of debt securities products and debt trading facilities, corporate governance, exchange of staff and research projects. It is an interesting time to see whether the MoU between Bursa Malaysia and SSE can bring benefits to both exchanges and markets or not. CFA and Eurex to Enhance Market Structure in China On December 2, 2012, China Association (CFA) and Eurex Group signed a comprehensive cooperation agreement at the 8th International Derivatives Forum in Shenzhen. The agreement facilitates the further development of both derivatives markets. Both partners had already started working together and hosted joint training sessions over the last months in the People s Republic of China. The signing of the agreement will transform and enhance the cooperation further. It s worthy to note that Eurex is the first international and globally operating derivatives market to enter into a cooperation agreement with the leading Chinese futures association. In accordance with the Memorandum of Understanding: They should start a comprehensive sharing of knowledge and information on business areas and regulatory developments, Conduct joint cooperative research in order to further develop knowledge on domestic and global derivatives markets, To explore joint initiatives to create further value to the member firms of Eurex and CFA, Continuation of joint training and education initiatives for CFA member firms, as well as regular visits from each organization s senior management. According to Liu Zhi Chao, CFA Chairman, We are looking forward to build a new bridge for further exchange and cooperation between CFA and Eurex through this MoU. We are very pleased to have signed this agreement with CFA as first non-chinese market operator and look forward to enter into a fruitful partnership with this leading institution of China s futures market, said Michael Peters, member of the Eurex Executive Board. Our first joint training sessions have turned out as very successful, and we are already planning the next seminars to be held in early CBOE Holdings to Transition SPXpm from C2 To Hybrid Trading On November 29, 2012, CBOE Holdings announced plans to transition its SPXpm product from the company s C2 Options Exchange (C2) to CBOE, where it will be traded on CBOE s hybrid trading model incorporating both electronic and open outcry trading. The transition will consolidate the company s entire S&P 500 options product line on CBOE, which is expected to increase access and liquidity by exposing the product to a broader user base. The company s pm-settled SPX options (including SPXpm, SPX Weeklys and SPX Quarterlys) will trade in CBOE s hybrid environment under ticker SPXPM. Additionally, CBOE s flagship SPX option, which is am-settled, will continue to trade in Open Outcry environment under ticker SPX. According to William J. Brodsky, CBOE Holdings Chairman and CEO, Moving SPXpm to CBOE s hybrid trading environment opens up access to a very active SPX trading crowd on the floor of the CBOE. CBOE plans to begin transitioning SPXpm options in the first quarter of 2013, pending regulatory approval. 19

20 December 2012 Monthly analytics for Power, Natural Gas, Crude Oil and Environmental markets. Graphs prepared with ZEMA. Actual Weather (AccuWeather) With the onset of winter, a steep decline in temperatures was observed on the East Coast. The weather on the West Coast remained mild and temperature declined very gradually. Actual Temperature (AccuWeather) Eastern power prices dropped between November and December on the backs of lower natural gas prices and sufficient generation resources. In New York, prices fell by 8 USD/MWh to 57 USD/ MWh. In New England, electricity prices also declined with ISO- NE boasting generation capacity of 33,000 MW, which exceeds the peak demand of 22,355 MW. California prices remained on the same level with mild temperature. North American Electricity Forward Curves (ICE) With expectations for steady fundamentals, electricity forwards did not change much between November and December. The longterm trend remained on the same level as in the previous month. 20 Interested in ZEMA Dashboard? Contact us to learn more