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Prague power bourse to offer Romanian, Polish futures contracts
August 25, 2014 / 7:02 AM / 3 years ago

Prague power bourse to offer Romanian, Polish futures contracts

* 2014 volumes likely won’t match year ago

* 10 members ready to trade the products

* Financially-settled futures contracts

By Michael Kahn

PRAGUE, Aug 25 (Reuters) - The Power Exchange Central Europe will launch Polish and Romanian futures contracts on Sept. 1 in a move aimed at boosting liquidity and becoming a regional trading centre for central and southeastern Europe.

The financially-settled month, quarter and year contracts will cover baseload and peakload hours and add to similar offerings for Czech, Slovak and Hungarian futures, the Prague-based exchange’s chief David Kucera said on Monday.

“We have 10 members of the exchange that have expressed interest in trading these contracts,” Kucera said. “We are the only exchange in the region to offer financially settled futures contracts in five CEE countries.”

The offerings covering two of the region’s biggest countries increase the competition with Hungary’s HUPX exchange and Poland’s POLPX exchange which in the past have talked about offering financially settled products but have yet to do so.

The bourses have set up shop over the past seven years in hopes of one day tapping into a potentially lucrative power market in a region with good grid connections and scope for prices to rise.

Growth, however, has been slower than initially expected due largely to the region’s slow economic rebound from the 2008 global financial crisis and a flood of renewable energy from Germany, which have combined to depress long-term power prices.

Most of the trading in the region takes place in the over-the-counter market but exchanges such as the PXE have been pushing to make it easier for trades to access the exchange to win share.

Last year the PXE launched new settlement services through Germany’s European Commodity Clearing to cut costs for bourse members and lower margin limits. ECC is a subsidiary of Leipzig-based European Energy Exchange.

Kucera also said he hoped the new products would boost liquidity after trading slowed down following a strong start to the year.

In 2013, the PXE generated nearly 30 TWh in trades in its best-ever year. The first six months of 2014 were on the same pace but recently volumes have fallen sharply.

“I‘m not sure what it is,” Kucera said. “Some days we have good volumes and the next day it dries up. Volumes in 2014 will likely not approach the level of last year.” (Reporting by Michael Kahn, Editing by Louise Heavens)

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