European gas exchanges lose share to brokered market in 2018

Natural gas trade conducted on exchanges fell to its lowest annual total in three years in 2018, losing ground to brokers for the first time since 2016, data collated by ICIS showed.

Exchange-traded volumes totalled 13,507TWh in 2018, down 9% from the previous year’s total.

Resurgent growth in the brokered market , driven primarily by the Dutch TTF, hit exchanges’ slice of total trade by 7 percentage points to 31% – their lowest market share in at least four years.

Trade across all venues jumped by 12% to 43,543TWh.

Most exchange-executed volume took place via ICE, with the US-headquartered platform accounting for almost 52% of British NBP and 19% of TTF trade in 2018. ICE offers traders a strong pool of futures liquidity on Europe’s two most liquid markets.

The British hub remained the more liquid ICE venue, but its lead over the TTF dropped by over a half to 1,829TWh.

Traders looking to deal anonymously like hedge funds prefer ICE to the brokered market, although they can access the latter through agreements with banks. The bourse has almost zero presence on the prompt market and small hubs. ICE volumes totalled 11,666TWh in 2018, more than 9% lower year on year

PEGAS, owned by German EEX, has had greater success penetrating Europe’s small hubs and has a significant slice of TTF prompt liquidity. Volumes on the platform dropped 4% to 1,841TWh as higher non-TTF trade failed to compensate for less deals on the Dutch hub.

The German NCG hub remained PEGAS’ largest markets outside of the Netherlands. The exchange first offered products in the French market and continued to have a strong presence there in 2018, accounting for over 25% of total trade.