Introduction to Trayport

Transcription

1 Introduction to Trayport Tokyo Power Market Seminar 2018 Richard Everett Head of Product and Markets 14 June 2018

2 TRAYPORT

3 TRAYPORT WHAT WE DO Trayport is a software, networks and connectivity company that provides the matching engines or connectivity for BROKERS and EXCHANGES operating in: MARKET CONNECTIVITY Trayport provides higher visibility of products across the energy market Hybrid bilateral markets OTC cleared markets exchange cleared markets EMISSIONS COAL We offer an aggregated trading system for participants wishing to view and trade across multiple of these venues. FREIGHT GAS Our technology underpins over 85% of all Power, Natural Gas and Coal derivatives trading in Europe. POWER OIL 4

4 TRAYPORT OUR NETWORK We are the primary electronic trading platform in the European wholesale energy market Our network includes 3,700+ traders and 250+ trading companies and we connect traders across 21 exchanges, 25 wholesale brokers, and 6 clearing houses in 29 countries EUROPEAN BROKER CONNECTIVITY 42 Financial Services Ardoff Broking Atlantic BGC CIMD Clarksons EBI (Energy Brokers Ireland) Evolution Ginga (Japan & Singapore) GFI Global Coal Global Ore Griffin Markets ICAP Libra Fearnley Links Commodities Marex Spectron Energy Marex Spectron Freight OTCex Power Solutions Shard SSY Starfuels Tradition Financial Services Tullett Prebon TRADER CLIENTS BY LOCATION USA Singapore Cayman Islands EUROPEAN EXCHANGE & CCP CONNECTIVITY Australian Energy Market Operator (AEMO) Borsa Italiana (IDEX) Central European Gas Hub (CEGH) European Energy Exchange (EEX) Gas Point Nordic Gestore Mercati Energetici (GME) Hungarian Power Exchange (HUPX) Iberian Gas Hub Jakarta Futures Exchange J Oil Exchange Nasdaq OMX Commodities Europe OMIP OPCOM Pegas Powernext Power Exchange Central Europe (PXE) WSE InfoEngine BME Clearing S.A.U. CME Clearport ECC NASDAQ OMX OMIClear SGX Asia Clear

5 EUROPEAN ENERGY COMPOSITION: BROKER / CLEARED / EXCHANGE Forward/future electricity markets offer market participants hedging opportunities against spot price uncertainties, in order to improve stability of their cash flows. The majority of forward/future contracts are traded through brokers, while the rest are traded across multi country platforms. Information as at: 30 June 2017 Estimates based on Trayport analysis and market research

6 EUROPEAN ENERGY COMPOSITION: ASSET SHARE

7 EUROPEAN EXPERIENCE

8 MARKET DEREGULATION IN EUROPE NOW Liberalised Developing Reforming Closed The majority of EU countries have liberalised electricity and gas markets. In CEE and Russia electricity is becoming a competitive market with regulation in place Some Eastern EU countries (Balkans) have less liberalised markets and the are still working on the legal framework

9 FORWARD AND FUTURES MARKET EVOLUTION The DEREGULATION of power and gas has supported the creation of the wholesale market. BROKER CLEARED There is an initial requirement for the adoption of rules and regulations governing the physical side of the business, the emergence of standardised contracts will support this development. The creation of multilateral BILATERAL trading aided by BROKERS, who help to create trading opportunities between counterparties. These trades start to be reported more widely, thus creating the beginnings of a transparent market. With price disclosure comes price discovery which in turn attracts more players to the market, often at this stage smaller physical traders and the first tentative moves by financial players. EXCHANGES provider standardisation and facilitate greater access to the market, especially by non physical players.

10 EUROPEAN POWER MARKET - MARKET PARTICIPANTS Electricity trading is both physical and financial. Physical exchange of power usually happens among counterparties through bilateral agreements ( EFET standard contracts) and also OTC brokers. Exchanges offer financial and physical, typically short term physical and longterm financial. Clearing houses remove counterparty risks between buyer and sellers. Who they are? Traders Interdealer Brokers (OTC) Exchanges What do they do? Procurement, hedging and speculation: Banks/Funds Retailers (utilities) Generators Commodity trading houses Facilitate transactions between counterparties for a fee and without taking positions. Offers a marketplace where members can trade instruments without incurring in counterparty risk (clearing)

11 MANAGING RISK BILATERALY OR VIA EXHANGE OTC BILATERAL MARKET CLEARED MARKET Clearing House OTC BROKERAD TRADE BROKER Broker matches interest OTC CLEARED EXCHANGE Anonymous trade General Clearing Member (GCM) TRADING COMPANY 1 TRADING COMPANY 2 BILATERAL TRADE TRADING COMPANY 1 TRADING COMPANY 2 Trading Company Direct Clearing Member(DCM) TRADING COMPANY 1 Trading Company Non-clearing Member (NCM) TRADING COMPANY 2

12 PRODUCT CHARACTERISTICS: CONTRACTS TRADED & PERIODS The most common financial and physical instruments used in the electricity sector to hedge underlying energy price risks are FUTURES and FORWARDS. FUTURE / FORWARD Base load Peak load Off Peak HOURS GERMAN POWER MARKET: 100 ACTIVE CONTRACTS DAYS MW MW MW MW WEEKS MW MW MW MONTHS MW MW MW JAPAN POWER: TBC: CONTRACTS? BRENT FUTURES: 9 ACTIVE CONTRACTS QUARTERS MW MW MW SEASONS MW MW MW YEARS MW MW MW SPREAD OF LIQUIDITY ACROSS MANY CONTRACTS MAKES BROKERS KEY TO SUCCESS OF MARKET

13 MANAGING THE RISK: LOAD SHAPES In reality hedging is carried out over the portfolio and multiple trades across Spot, Physical Forwards and Futures are used to hedge a close as possible the physical requirements. Physical Forwards Day ahead > Years Financial Futures (Generally) Months > Years SPOT Day Ahead and Intraday

14 THE TRADERS DESK

15 THE TRADERS SCREEN To Manage Risk: High number of contracts to mirror risk profiles liquidity support from brokers. Financial and Physical products to support a wide range of market participants Wholesale markets for fuels and power