TriOptima Compression Cycle Responds to EMIR

TriOptima said that 13 banks and energy houses have eliminated more than 4,300 power and gas swaps and forwards with a combined notional principal value of €8.4bn. Participants included: Alpiq, Bank of America Merrill Lynch, BKW Energie, Citigroup Global Markets Ltd, EnBW Trading, Iberdrola, JP Morgan, ScottishPower, and Société Générale.

The terminated trades covered 182m megawatt hours (MWh) in European power, 25m MWh in European natural gas and 320m therms of UK natural gas.

TriOptima, which is part of ICAP Group and provides infrastructure and services for over-the-counter (OTC) derivatives, added that spurred by recently-implemented European Market Infrastructure Regulations (EMIR) around clearing thresholds – as well as the implications of the new leverage ratio and Basel III capital requirements – market participants have been eager to eliminate as much gross notional exposure as possible in their OTC derivative portfolios.

“This is the largest compression cycle we have seen so far in the energy markets and is a clear sign that the sector wants to maximise the risk reduction benefits of eliminating trades,” said Mattias Palm, TriOptima’s business manager for commodities.

“We are pleased that we were able to support the market as it moves to manage its exposures, and we expect interest in eliminating all types of commodity trades will continue to grow.”

The trades terminated included both physical and financial power and natural gas products, and spanned many European countries:

  • Power: Amprion (Germany), CEPS (Czech Republic),  NGrid (UK), MAVIR (Hungary), OMEL (Spain), PUN (Italy), RTE (France), SwissGrid (Switzerland), TenneT (Netherlands), and TERNA (Italy).
  • Natural Gas: Baumgarten (Austria), Gaspool (Germany), NBP (UK), NCG (Germany), PEG (France), and TTF (Netherlands).


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