May 15, 2020 / 4:46 PM / 15 days ago

EEX to launch clearing for Japanese power futures

* Clearing services launch for the power community

* Expands EEX reach in Asia

* Participants gain access to EEX products elsewhere

* To open office in Tokyo in summer

By Vera Eckert

FRANKFURT, May 15 (Reuters) - The European Energy Exchange (EEX) said it will launch its new trade registration service for Japanese power futures on Monday, expanding its presence in Asia.

The first transactions are due to take place during the daytime in Japan and trading will transfer to EEX’s European platforms at 0800 CET (0600 GMT), said Steffen Koehler, Chief Operating Officer.

“We are 48 hours away from taking another step into the Asian time zone as two-year preparations come to an end,” he said in an interview with Reuters.

“We expect to have critical mass on the 18th or shortly thereafter to get the clearing offering off the ground.”

Clearing services help companies involved in wholesaling, generation and distribution with their risk management, while opening new trading avenues for EEX’s network of members, who include utilities, brokers, clearing banks and other intermediaries.

Japan had 1,020 terawatt hours (TWh) of power consumption in 2018, twice the size of Germany’s and ranking fourth in the world after China, the United States and India according to researchers Enerdata.

The Japanese government opened the country’s power market to more competition in the wake of the Fukushima nuclear disaster in 2011 by allowing new entrants, encouraging renewables and supporting market-based trading of power rather than bilateral sales by utilities.

“We bring the biggest distribution network to the table, that is a big advantage the regulators considered when they invited us into this market,” said Koehler.

Europe opened its power markets gradually from the 1990s to develop price discovery, transparency and hedging instruments.

EEX, a subsidiary of Deutsche Boerse, provides power contracts trading and clearing services outside the bourse, over-the-counter (OTC), to help eliminate counterparty risks.

It has also become a big player in North American power markets through its subsidiary Nodal.

The offering in Japan will comprise the clearing of trades for weekly, monthly, quarterly, seasonal and annual delivery periods up to six years in advance.

Koehler said participating brokers included Enechain, Arraco, Amerex, Tullet Prebon, Icap, SSY Futures, Marex Spectron and TFS.

He also said that EEX would open an office in Tokyo in the summer, barring delays related to the coronavirus pandemic, to complement its Singapore operations. (Reporting by Vera Eckert, editing by Susan Fenton)

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