“Combining Nord Pool’s expertise in the commodities market with our global distribution capabilities and customer base puts us in a unique position as a financial centre for energy-related derivatives,” says Geir Reigstad, head of NASDAQ OMX Commodities.
NASDAQ OMX Commodities is positioning for the increased competition and consolidation in the global energy market.
Tailored for growth
Growth continued to characterise the commodity derivatives market in 2008. For members of the International Options Market Association, roughly 1.5 billion futures were transacted during the year, up 38 percent from 2007. Options transactions were 154 million, a rise of 29 percent from the previous year.
NASDAQ OMX Commodities and Nord Pool have 390 members in 22 countries across a wide range of energy producers and consumers as well as financial institutions. Total traded and cleared volumes reached 2,576TWh in 2008.
“NASDAQ OMX Commodities and we are positioned for further growth,” says Nord Pool CEO Erik Thrane. “Together, we have the expertise and efficiency, including business systems which market participants’ request. Along side, power and carbon derivatives, the exciting new markets for the future are gas and coal.”
Entering the UK market
As a result of a formal request for proposal (RFP) process initiated by the Futures and Options Association (FOA), this London-based organisation chose in November 2008 to support the N2EX market solution. This has been offered to the UK power market by NASDAQ OMX Commodities in cooperation with Nord Pool Spot.
“The N2EX market design has been tailored specially to the requirements of the UK power market, in close cooperation with the FOA members and brokers,” says Reigstad. “We will offer trading and clearing services, and our aim is to build market liquidity, efficiency and transparency.”
NASDAQ OMX Commodities and Nord Pool Spot’s objectives are to establish a physical reference price based on the physical spot market and later a derivative market, and to offer cross commodity netting opportunities. This will provide the basis for further development of the market with several new products and business opportunities.
Nordic power market
The expertise and knowledge in NASDAQ OMX Commodities and Nord Pool derive from the position they have held at the forefront of the power market for 15 years. Ranked as the most liquid exchange-traded power market in the world, the Nordic power market is characterised by credibility, transparency and anonymity. In 2008, more than 70 percent of Nordic electricity consumption was transacted on Nord Pool Spot, the physical power exchange.
Total Nordic physical consumption was close to 400 TWh and financial trading was 6.5 times the underlying consumption in 2008, with a contract value of EUR 119.3bn.
Carbon market
NASDAQ OMX Commodities and Nord Pool provide access to Europe’s carbon markets. They offer trading, clearing and delivery of European Union allowances (EUAs) and certified emission reductions (CERs).
Consultancy services
Nord Pool Consulting provides consultancy services related to the operation and development of international power markets. It has contributed expertise to developing physical and financial marketplaces in 65 countries worldwide.
For more information www.n2ex.com; www.nasdaqomx.com/commodities; www.nordpool.com
