The NASDAQ OMX Group, Inc. (Nasdaq:NDAQ) announced today that NASDAQ OMX Commodities and Nord Pool Spot AS have been chosen by the Futures & Options Association (FOA) in UK to establish a spot and cash-settled derivatives power market with a full range of clearing services.
FOA has chosen the consortium NASDAQ OMX Commodities and Nord Pool Spot for the delivery of market and clearing services for the UK Wholesale Power Market. The parties plan to establish the exchange within Q2 2009. Nord Pool Spot has experience from operating power markets since 1993, while NASDAQ OMX supplies exchange technology to over 60 financial marketplaces in over 50 countries.
Anthony Belchambers, Chief Executive of the FOA, said, "It is customary for market infrastructure providers to go to the market with ideas for new contracts or market enhancement. In this case, it is the market participants who have taken the initiative. The process of review was significantly more protracted than originally anticipated due to the complex nature and high quality of all the responses to the RFP, not to mention some intervening changes in partnerships. However, the depth of experience and resources and the quality of the offering by NASDAQ OMX Commodities was sufficient to secure the unanimous support of the Market Participant Project Board."
Erik Saether, CEO of Nord Pool Spot AS, said, "Together with NASDAQ OMX we will offer a complete solution, including trading, clearing and notification services for the Prompt and Auction markets to be delivered immediately. We will also provide trading, clearing (including OTC), notification, settlement and delivery of all 1/2-hour physical contracts with a uniform interface."
The solution will comprise a cash-settled power derivatives market, allowing complete netting across contracts with the same delivery periods, with correlated contracts and positions in different commodities. Existing members at Nord Pool/NASDAQ OMX will not have to pay any dual fees for the UK market. The new market and clearing services will also allow for complete netting across contracts with the same delivery periods, with correlated contracts and positions in different commodities, giving maximum efficiency.
The consortium will run a 24/7 Prompt market with immediate clearing and notification. A 24 hour helpdesk will be a single point of contact to ensure that members view the solution as a seamless service. NASDAQ OMX Commodities/Nord Pool Spot will also run an Auction market, providing all services from bid-entry to reporting.
Geir Reigstad, Head of NASDAQ OMX Commodities, said, "NASDAQ OMX Commodities welcomes this opportunity to develop and enhance the UK power market, and we look forward to working with the FOA and the Power Trading Forum on this project. Together with Nord Pool Spot, we bring a wealth of experience to deliver the objectives of the FOA's RFP to improve access, participation and liquidity in the UK Power Market, allowing it to grow and become more efficient."
Local Presence in the UK
The consortium will establish an office in London to serve the UK market. This office will be staffed with experts on UK power markets, and be a single contact point for participants for all matters, covering the Prompt market, Auction market, clearing and notification solutions, and the futures market.
About the UK consortium
NASDAQ OMX Commodities is Europe's third largest marketplace and clearing house for derivatives, with customers in Sweden, Finland, Denmark, UK and Germany. Nord Pool Clearing, now wholly-owned by NASDAQ OMX, is the world's largest clearinghouse for financial power contracts in terms of both volume and open position with customers in 22 countries. Nord Pool Spot AS has been operating spot market for power since 1991. Nord Pool Spot AS operates today the Nordic day-ahead market Elspot, the intra-day Elbas market, and a Danish market for gas. Nord Pool is the leading power exchange in Europe, with 15 years of experience offering derivate trading which now includes contracts for Nordic, German and Dutch power as well as carbon contracts.
NASDAQ OMX Commodities Business Development is the leading expert in establishing new power markets and gives the Consortium a solid platform to provide state of the art products and services to the UK power market. The offering complies fully with the UK FSA regulations and existing exchange and clearing member relationships will be utilised. NASDAQ OMX Commodities is an entity within the NASDAQ OMX Group.