EFET presents new Italian language trading contract to boost activity
The European Federation of Energy Traders (EFET) has drawn up a new master trading agreement for the Italian gas hub with an Italian language translation, EFET head Jan van Aken, told the 6th Italian Energy Summit in Milan on Wednesday. The annex will be in both Italian and English, with the English version prevailing in case of disputes.
The contract, developed in association with Italian wholesalers and traders association AIGET, aims to promote the use of standard trading terms within Italy, with the eventual aim of making it a more attractive trading environment for foreign companies and speculators.
An EFET trading annex is used widely on most of western Europe’s traded energy markets. It has not taken off in Italy, however, despite an annex having been developed nearly two years ago.
The new initiative was partly prompted by a fresh request from the energy regulator last year, but EFET is clear that the contract has been developed entirely with industry co-operation and has not been influenced by the regulator.
EFET is now embarking on a road show to promote the benefits of using the contract and will be hosting a workshop in Rome on 16th October. “A handshake is not good enough for most companies,” van Aken said, alluding to the fact that many deals in Italy are still conducted on trust and on the basis of long-standing relationships, with little concern for credit risk.
EFET hopes the contract will entice more traders onto the Italian gas market, but van Aken pinpointed an unpredictable and complicated legal and regulatory framework as the main barrier to non-Italian companies. The tight supply of gas and wholesale price caps are also major issues.
There is a ray of hope that speculators will be enticed onto the Italian power market as Barclays Capital is due to start trading in the next few weeks. However, a trader with the company told The Heren Report on Wednesday that the bank has no intention of entering the gas market at the moment as “it’s too risky unless you have a physical position”. LB
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