Trading at Austria’s VTP natural gas hub will become cheaper from April as its operator Central European Gas Hub (CEGH) tries to attract new players, CEO Gottfried Steiner told ICIS at the E-World conference in Essen.
“By reducing the fees by about one third we will significantly lower the market entry barriers,” Steiner said.
“Across all European hubs we have recently seen participants leaving the market. That’s not a positive development – so we decided to do something against this trend,” he added.
While the number of OTC players active at the VTP on a daily basis increased from 70 to 75 over the course of 2013, the current level is well below the peak of 84 active players seen in August and September last year, according to CEGH.
“The most pressing matter was finding measures to encourage smaller players to enter the market. I am confident that the lower fees will contribute to increasing the number of active participants,” Steiner said.
Under the new fee model, participants will pay €0.012/MWh for the first 10TWh traded per year, and half that for any volumes that exceed this. Under the current regime, all players have to pay a higher fee of €0.02/MWh for the first 3.33TWh traded in one year.
CEGH will continue to charge a general monthly fee of €1,000 to all participants, but from April the first 21.9GWh traded per month will be free of additional charge. This would, for instance, cover a 30MW front-month trade.
In addition to the new OTC fees, CEGH will also introduce changes to the exchange business in the second quarter. The company plans to launch a total of nine new future contracts, including four front quarters, three front seasons and two front years.
“Feedback from the market consultation has been positive so far,” Steiner said.
“We might just lower the minimum lot size from 10MW to 5MW on the Calendar Year contracts and the third season,” he added.
Steiner is confident that by the launch date, which is currently scheduled for some time in May, there will be market makers in place for all new future contracts.
Existing market makers at the CEGH Gas Exchange are Austrian OMV-subsidiary Econgas, Slovak incumbent SPP and German utility RWE. Steiner said the new market makers are likely to also come from this circle of companies.
Trading at Austria’s exchange has recently rocketed upwards, with volumes more than quadrupling year on year in 2013, reaching 13.22TWh.
The number of active participants has doubled compared with 2012, currently standing at 43. At the same time, however, OTC trading has also increased and still represents about 95% of the market, according to Steiner.
Last month, the VTP hub saw the highest traded volume in CEGH’s history, with a total of 25.23TWh traded, ICIS data showed. Johanna Blackader