November 16, 2018 / 2:16 PM / a month ago

Clearing members warn recovering money after Nasdaq deal could take a long time

OSLO (Reuters) - It could take more than a year to recover funds from a trader whose default forced members of the Nasdaq Commodities exchange to plug a $130 million hole, two market participants told Reuters, a day after the trader struck a deal with creditors.

The deal, which two sources said would return at least half of the funds lost, allows Einar Aas to avoid bankruptcy and keep his home in Norway, though he will have to auction other assets in Norway and Spain.

“Α lot of the assets will take a lot of time to liquidate. The timespan could easily be more than a year,” said Stefan Barkholt Ovesen, chief executive of Nordstroem Invest, a Nasdaq clearing member that trades power.

The derivative trader’s default was caused by strong fluctuations in regional power market spreads in early September, as heavy rain had pushed down prices in the hydroelectric-dependant Nordic region, while a spike in the cost of carbon drove up German prices.

A source at one of Nasdaq’s largest clearing members, who had direct knowledge of the deal’s details and did not want to be identified, also said recovering the money would take time.

“Evaluating the assets across countries, organizing and conducting auctions, reaching a conclusion on how to distribute the proceeds ... It will take years, not months,” the source said.

Aas did not immediately respond to a Reuters request for comment.

Some members contacted by Reuters said they were satisfied with the deal creditors struck, though some were still awaiting answers on how the default occurred.

“We are very happy with the deal ... as it avoids bankruptcy, which was a risky scenario. There is still the question of how could this happen. It is not something you forget,” investor relations manager Maans Holmberg at Finland’s Fortum (FORTUM.HE) said.

At least one firm was publicly unhappy.

Agder Energi, the only firm that initially opposed the settlement, according to Nasdaq, said it had agreed to participate because not doing so would only have delayed the process.

“It (the deal) is unbalanced,” Steffen Syvertsen, Agder Energi’s director of energy management and trading, told Reuters.

“As long as it was not possible to change the agreement, but only slow down the process with increased costs, we therefore decided to accept.”

Nasdaq said it did not want to speculate on the final outcome of the process, declining to estimate how much money would be recovered and when.

Editing by Gwladys Fouche and Dale Hudson

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