CME to launch new European power contracts in June
FRANKFURT, May 20 (Reuters) - CME Group Inc. said on Wednesday it would launch eight new European power futures contracts on CME Europe from June 15 to meet interest in newly emerging, traded electricity markets.
The global futures market operator said the contracts for German, Italian, Spanish and French futures had been authorised and approved by the UK Financial Conduct Authority and would be distributed via the Trayport platform alongside other exchange products.
Power markets in Europe are increasingly connected via border interconnectors, driven by traders' interest and helped by IT systems that can factor in existing bottlenecks and provide better usage of the existing infrastructure.
"As European Power markets evolve with supply and demand changes and the impact of renewable energy, CME Group is committed to providing effective, relevant tools tailored to the risk management needs of our regional energy customers in those markets," said Cees Vermaas, Chief Executive Officer, CME Europe.
The contracts are for base load, 24-hour supply, and peak load, day side supply meeting higher demand, and are all cash settled against the leading power auctions for each market.
CME also recently launched European natural gas futures, so the new slate of contracts can be traded in tandem in markets where asset classes are closely connected.
Electricity in Europe also is correlated to hard coal and carbon emissions trading, depending on the specific fuel mixes of national markets.
The CME announcement came on the day when new ways of handling cross border power flows are enacted by transmission grid firms and energy exchanges in a process called flow-based market coupling in the French, Benelux and German electricity sectors.
This, along with less advanced measures in wider Europe, is meant to change wholesale price patterns and allow operators new trading opportunities, not least as more renewable power volumes are released out of price support schemes and enter the traded markets.
CME, while also a big energy player in gas, coal and crude oil, refined products and biofuels, in continental Europe is competing with local market leader the EEX Group, and with Nasdaq Commodities.
(Reporting by Vera Eckert, editing by William Hardy)
