Romanian electricity exchange OPCOM to launch OTC platform soon
The Romanian electricity exchange OPCOM is working on an over-the-counter (OTC) platform, according to one of its representatives.
"We started a project last year to diversify the standardised products. We intend to provide OTC services. We had preliminary discussions with [regulator] ANRE, as well as mail correspondence with Romania's traders association and this product will be developed as soon as possible," Rodica Popa, OPCOM's programme director, said in a panel discussion during a conference in London on Thursday.
She added that the technical conditions already exist and the rules should be developed together with the market participants. However, OPCOM cannot provide clearing services because Romania's capital market law only allows financial exchanges provide such services.
"We cannot have clearing services based on clearing-house rules. That is why the settlement on OPCOM can only be bilateral. An approach to include brokers in the deals has not yet been discussed," Popa added.
Last Friday, OPCOM announced its draft plans for a new platform for physically delivered bilateral contracts with delivery periods lasting longer than one year (see EDEM 14 September 2012).
The Romanian wholesale power market could be saved if OPCOM is able to clear brokered deals, according to Zsolt Bojtos, head of foreign assets management and southeast European markets at Czech incumbent ČEZ.
"The letter sent by ANRE to market participants on Monday is an example of how a functioning market can be paralysed in an instant. Screens turned blank immediately," he said during the discussion.
On Monday, ANRE said in a letter that electricity trading in Romania on any platform other than local exchange OPCOM was banned. It demanded market participants produce all records of deals concluded on other platforms apart from OPCOM from when the amendments to the electricity law came into force at the end of July until trading desk's received ANRE's letter. This left market participants fearing that they might face fines (see EDEM 18 September 2012).
"In my view, people should not be obliged to use OPCOM. If they just offer good prices, they will attract interest. If you want to boost trading on a certain platform you should offer the best market on that platform," a Hungarian trader said, giving the Hungarian exchange HUPX as an example.
No short-term trading
Currently, OPCOM does not provide a platform on which traders can close short-term positions, such as week-ahead contracts. The only options are the day-ahead and public auctions, which can be a problem.
A Romanian trader said it was not sustainable for traders to be forced to go to the day-ahead market to close their week-ahead positions, for example.
ANRE will be informed by OPCOM about progress on the matter, but it had to be taken into consideration that it takes time for regulations to be approved by the regulatory authority, Popa said.
She also noted that ANRE had until December to issue all necessary clarifications to the energy law amendments and for now OPCOM is providing ANRE with documentation, which should help speed up the process.
There is uncertainty about the rules for cross-border trades now. A Bulgarian trader said he was selling electricity only to the Romanian border and did not want to do cross-border deals because he was concerned that he may be fined as the rules were unclear. Another Bulgarian trader confirmed that his company's legal advisor was still waiting for clarifications on the matter.
ANRE is responsible for specifying cross-border trading rules and not OPCOM. The regulator was unavailable for comment on Friday.
Two other sources said that the Romanian government may start re-examining the law. "We hope that the trading-related issues will be addressed as well," one of them said.
At the end of July, the Romanian government approved the conduct of electricity trading in a "centralised manner" but did not define what that would involve or say whether all counterparties both state generators and private companies would be covered by the law (see EDEM 19 July 2012).
In a meeting with ANRE on 20 July, traders failed to prise the clarification from the regulator, but were told to move all trading activity to the OPCOM exchange until clarification was sent (see EDEM 20 July 2012). IP
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