July 3, 2019 / 1:54 PM / 12 days ago

EEX to launch clearing for Japanese power futures next year

FRANKFURT, July 3 (Reuters) - The EEX European energy bourse on Wednesday said it aims to offer trade registration services for Japanese power futures in the first half of 2020 as it expands its presence in wholesale markets.

After completion of a consultation process, the Japanese futures will represent the first Asian market area on the EEX power derivatives platform alongside 20 other markets, it said in a statement.

Japan’s government forced through more competition in the country’s regionalised $130 billion power market in the wake of the Fukushima nuclear crisis earlier this decade, by allowing new entrants, encouraging renewables and supporting market-based trading of power alongside bilateral sales by utilities.

The registration entails the clearing of financially settled power futures contracts after deals are concluded bilaterally or via brokers.

EEX, part of Deutsche Boerse, said Japan’s economy ministry confirmed the EEX plans this week. The product offering was still subject to standard European regulatory approval. “As EEX Group, we are determined to support the further development of the fast-growing Japanese power market,” chief executive Peter Reitz said. “We will continue to work closely with the industry, both in Japan and overseas, in order to provide the market with risk management tools to hedge against price risks, thereby increasing the overall transparency and security of the market.” While EEX is firmly routed in its European core markets, forays into North America and Asia have allowed global price arbitrage as well as clearing and registry services across all time zones. Earlier this year, it said there was overlapping interest from clients, who apart from Japanese power, were also interested in, or already existing players in, markets for iron ore and freight futures. (Reporting by Vera Eckert, editing by Alexandra Hudson)

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