Energy bourse EEX plans financial gas futures

EEX, a European energy bourse known mostly for its electricity contracts, will add cash-settled gas futures in the middle of 2021 to offer its trading participants risk hedging in the two related markets, its chief executive said.

The introduction of the gas futures will enable the over 700 professional entities on the EEX to trade the price difference between gas and power futures, creating a bridge between the two derivatives markets.

“Through our new products, the operator (of a gas-fired power plant) will be able to buy protection for his profit margins in one single transaction,” EEX head Peter Reitz told Reuters in an interview.

So far, the EEX offered only physically settled gas futures, useful for industry operators but less attractive for pure financial players, who now also gain better access.

It will introduce the cash-settled futures on its existing European Gas Spot Index (EGSI) as well as associated spark spreads - power generation margins for gas burning.

The products will be listed in the Dutch, Austrian and German market zone for maturities starting from the day-ahead and stretching to calendar years.

Last year, it saw its spot and futures power trading, including those in Japan and the United States, rise 10% year-on-year to 7,077.3 terawatt hours (TWh), equivalent to over 10 times Germany’s power production.

The EEX contracts and over-the-counter trade clearing activities inside Germany have reached a 44% share of all power wholesaling.

Reitz also said the bourse will look for further growth opportunities in LNG, carbon and hydrogen markets this year.

It will add more distant years to its core European power futures contracts, making trades up to 2030 possible. (Reporting by Vera Eckert, editing by Susan Fenton)

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