European Spot Gas Market (ESGM) Consultation – Summary of Responses and Initial Decision
Reference number: GMC12/15
Consultation dates: 15 January – 16 February 2015
Introduction
As part of ICIS’ commitment under the Independent Price Reporting Organisations code, the ESGM methodology undergoes a public review every two years. This was the second such consultation for the report.
ICIS has a commitment to publish in full all public responses to its consultations one week after the closure of the consultation. There were no public responses.
After two weeks it will reach an initial decision on questions raised and publish a summary of all confidential responses.
ICIS received six confidential responses to its ESGM consultation. Of these six, one sought not to answer the eight specific questions, but simply stated it has no concerns with the current methodology or with the proposed changes.
Responses
The majority of respondents felt the current methodology provides a good measure of market value.
Suggestions were made about the timing of the assessment close, particularly regarding the less liquid markets on the European mainland. One respondent suggested an hour-long assessment period. Others suggested shorter periods in which volume-weighted trades-based indices could be calculated. One respondent suggested that prompt contracts should be assessed over a one minute period and curve products over a five minute period. Another suggested a one minute closing period should apply to Day-ahead and Weekend contracts. An earlier close was also proposed by one.
The majority of respondents agreed that curve contracts should be assessed at 16:30, in line with the time of the prompt. With regards to assessing a contract as choice when it trades in this manner and removing the minimum threshold of a bid/offer spread, most respondents agreed to the proposed change.
Replacing the French PEG Sud and PEG TIGF price assessments and indices with corresponding TRS assessments and indices was supported by all those who responded to the questions on this subject.
Another suggestion was to allow ICIS direct access to tradable price information, from electronic platforms such as Trayport, to assist in the pricing process.
One respondent said corrected reports should make clearly visible the price that has been changed.
Initial Decision
Following the completion of the ESGM consultation, ICIS has decided to amend the methodology to move the assessment time of all curve contracts to exactly 16:30 London time, in line with the prompt.
ICIS has also taken the decision to remove the minimum threshold of bid/offer spreads within ESGM, allowing contracts to be assessed as choice.
Regarding ESGM’s French coverage, ICIS has decided to move ahead with replacing PEG Sud and PEG TIGF assessments with prices for the merged TRS hub. Similarly, PEG Sud indices will be replaced with corresponding TRS indices.
The change to the curve closing time and the ability to price at choice will commence on 1 April 2015. The switch from PEG Sud and PEG TIGF to TRS is expected to go-live a day earlier, on 31 March 2015. Should the French regulator or system operators change their proposed introduction of the TRS zone, ICIS will delay its price series change accordingly.
Following market feedback, ICIS has decided to visibly highlight prices which have been changed in its reissued, corrected reports. This will be introduced with immediate effect.
ICIS will also undertake a liquidity analysis of trades executed in the run-up to the close, to assess viability of additional end-of-day indices. Following feedback from the last ESGM consultation, ICIS introduced NBP and TTF volume-weighted trades-based indices for Day-ahead and Spot Weekend contracts, for the period 16:15-16:30, known as the Heren Closing Index. Renewed analysis will now determine whether a shorter period can be covered, and whether an accurate price can be achieved for other contracts and hubs.
With regard to sourcing trades data from electronic platforms, ICIS launched a deals reporting service in 2014 which allows companies who sign up to have their deals submitted direct from the Trayport Trading Gateway. Many trading counterparties now use this service. ICIS continues to encourage all market participants to provide deals data through this secure, arms-length mechanism.
No further changes to the ESGM methodology are planned at this time. ICIS wishes to thank those companies that responded and appreciates their input.
Please note that ICIS will continue to measure market trends and activity and gather feedback from participants on all of the markets for which it provides pricing. .
To provide further comments or feedback on the ICIS gas market methodology for ESGM, please contact Ben Wetherall or Tom Marzec-Manser
Ben Wetherall: Ben.Wetherall@icis.com
Tom Marzec-Manser: Tomas.Marzec-Manser@icis.com