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Polish POLPX keen to offer futures trading from next year - CEO

10 Jun 2010 17:37:20 | edem

The Polish Power exchange POLPX wants to start offering futures from next year, Grzegorz Onichimowski, CEO of POLPX, has told ICIS Heren in an interview. He also revealed that the exchange would introduce important changes to Day-ahead trading from November.

"We are in talks to start trading futures contracts. We want to start offering all futures products up to a year ahead," Onichimowski said. Progress is being delayed, however, by a misunderstanding between financial authorities over the exchange's status.

POLPX is currently only considered a commodities exchange, but to trade futures contracts the Polish bourse would need to acquire the status of financial exchange. Another option, according to Onichimowski, would be to split the business into two separate companies: one trading commodities and another trading financial contracts.

In spite of the ongoing wranglings, Onichimowski is confident that with the support of the Polish energy regulator futures trading can start from next year.

But POLPX would not be alone in offering power futures in the region. David Kučera, CEO of Power Exchange Central Europe (PXE), said: "POLPX and PXE work together on market projects sometimes," and told ICIS Heren he could envisage a market for Polish futures.

Changes to Day-ahead

Day-ahead products will start trading under Nord Pool Spot rules after coupling kicks off in November at the latest. The first stage of coupling will be between Poland and Sweden. The two markets are linked by interconnector SwePol. The new daily auction will be held at 12:00 hours Continental European Time (CET) with a gap in trading from 12:00 to 13:00.

A total of 13,573MW was traded on the POLPX on Thursday. Onichimowski believes this volume will triple year on year.

Market sources have previously said that the other Polish trading platform POEE is more user-friendly (see EDEM 23 April 2010). Day-ahead trading volumes on POEE are also significantly higher.

"POEE is a quasi-exchange; they have simpler rules," Onichimowski said. Additionally, traders on the POEE platform do not require a brokerage licence. POLPX is keen to increase the liquidity on its exchange by working towards getting a common EU brokerage licence.

Having the option of using the Warsaw Commodity Clearing House (WCCH) (see EDEM 19 April 2010) and having bank guarantees should help in increasing liquidity further. The lack of clearing services has also been one of the main obstacles to launching traded futures on POLPX (see EDEM 4 June 2009).

On the thorny issue of the Polish economy ministry's requirement that all power suppliers sell at least 15% of their generation on POLPX from 8 August (see EDEM 23 April 2010), a move likely to improve overall liquidity, Onichimowski appeared to dismiss any discontent and said: "I believe there is no more opposition to this law."

The CEO added that the law will most likely affect traders that have long-term contracts in place; this, however could be tackled via public tenders. "They will soon see that the prices on the open market will become more attractive than the prices from bilateral deals," he said. SR

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