 ECC Clearing Circular 37/2016 | 2016-08-18
Market Area TenneT Netherlands
- Reduction of ECC margin requirements
- Introduction Single-Sided Transaction Process to resolve
nomination inconsistencies
- Adjusted ECC admission criteria
News
Physical
Settlement
Summary
ECC will reduce the overall margin requirements by removing the delivery
margin component for the TenneT market area for both, deliveries resulting
from derivatives market positions as well as for spot and intraday market
transactions, effective from 27 September 2016.
This achievement is a result of the introduction of the Single-Sided
Transaction (SST) process to resolve nomination inconsistencies (mismatches) between ECC and participants in the market area of TenneT Netherlands
which becomes operational at the same time.
A necessary precondition for these improvements is an adjustment to the
ECC admission requirements for clearing of physically fulfilled Dutch power
market transactions.
Financial
Settlement
Risk
Management
Information
Technology
Contact
European Commodity Clearing AG
Clearing & Settlement
Phone: +49 341 24680-444
E-mail: [email protected]
ECC Clearing Circular 37/2016 | 2016-08-18
TenneT Netherland – Single-Sided Transaction Process
ECC will remove the delivery margin component currently applicable for all delivery positions in
Dutch power to cover the delivery risk of this specific market area. In order to reduce this risk
ECC introduces the so called Single-Sided Transaction (SST) process to resolve nomination
inconsistencies with the trading participants for the market area of TenneT Netherlands. As a
result ECCs nominations are always firm.
The reduced margin requirements as well as the new nomination process will take effect as of
27 September 2016 as first delivery day.
Physical Settlement
Physical Settlement of all transactions concluded at EEX and EPEX for delivery in the TenneT
Netherlands market area will be performed by ECC’s Luxembourg-based subsidiary - European
Commodity Clearing Luxembourg S.à.r.l – by nominating to the Dutch transmission system operator TenneT TSO B.V.
The current nomination process requiring a nomination of traded positions by both, ECC Luxemburg as well as the counterpart, remains unchanged for the day ahead the intraday market. Only in
cases of nomination inconsistencies (mismatches) between ECC and the respective counterpart - ECC will resolve the mismatch by using the Single-Sided Transaction (SST) process on
delivery day D+1. Whereas the SST process is an instrument of TenneT’s intraday market ECC
will also use the process to resolve any remaining inconsistency from Day-Ahead market trades by
booking a respective SST on delivery day D+1.
For scheduling processes ECC will use the following EAN code:
ECC (EAN Code)
Market Area / TSO
Nomination Method
4260088790057
TenneT TSO B.V.
Single-Sided Transactions (SST) priority rule for ECC
Purpose of Single-Sided Transactions (SSTs)
SSTs enable market parties (Program Responsible Parties) to submit transactions to TenneT without the inclusion in E-Programmes. The transaction is submitted to TenneT by only one of the parties involved. However, this party must have been authorised to do so by the other party beforehand. SSTs that have been correctly submitted are further processed without a consistency check
or additional authorisation by TenneT.
Single-Sided Transactions will be used by ECC to resolve nomination mismatches only. Transactions that have been correctly submitted to TenneT will be confirmed by TenneT in an EDINE message addressed to the Authorised Party and the Contract Party. In this EDINE message it will be
stated which transaction has been submitted to TenneT by which Authorised Party. The relevant
transaction is given an opposite sign (+/-) in the message sent to the Contract Party compared to
the one sent to the Authorised Party.
European Commodity Clearing AG
Copyright 2016
– All rights reserved
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ECC Clearing Circular 37/2016 | 2016-08-18
TenneT Netherland – Single-Sided Transaction Process
Margining
Currently ECCs nominations might be rejected by the transmission system operator in cases of
non-matching nominations with the participants’ counter-nominations. The resulting risk is covered
by ECC with a delivery margin (currently 20% of the notional value). After agreeing to the SST process ECCs nominations can be considered to be always firm. Thus the Delivery Margin is no longer required. ECC therefore plans to stop calling delivery margin for the NL market from
27 September 2016 onwards..
New Preconditions for clearing participation in the Dutch market area
(TenneT)
The acceptance of the Single-Sided Transaction procedures according to the rules imposed by
TenneT being performed solely by ECC are considered to be a mandatory precondition for the
clearing participation in power transactions with physical delivery in the Dutch market area (TenneT) at ECC.
All already registered clients have to authorise ECC to nominate SST on behalf and thus enabling
ECC to resolve any open mismatch position. The required authorisation form is part of TenneT’s
implementation guide (Annex 7.1) being attached to this circular and can be found on TenneT’s
website (currently here).
The SST is a precondition for new applications for clearing in power transactions with physical delivery in the Dutch market area (TenneT) as of today. During a transition period all members currently admitted for clearing of physically fulfilled Dutch power transactions will have to submit the
SST authorization form no later than 20 September 2016. ECC will collect all forms and forward
them to TenneT.
Participants that fail to provide ECC with said authorisation do not fulfil the preconditions for clearing of Dutch power products with physical fulfilment any longer and thus will lose their clearing admission in those products as of delivery day 27 September 2016.
European Commodity Clearing AG
Copyright 2016
– All rights reserved
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