Market trial and launch dates

NASDAQ OMX Commodities and Nord Pool Spot launch UK power market N2EX

(London, 12 January 2010) NASDAQ OMX Commodities, a business unit of The NASDAQ OMX Group (NASDAQ: NDAQ) and Nord Pool Spot today announced the successful launch of N2EX, its marketplace for physical UK power contracts. The launch included a day-ahead auction and a prompt market.

"After an intensive year of development and preparations with the UK market participants, we are very pleased with the day-ahead auction results and the volumes currently being traded on the first day of the prompt market. The total traded volume on the day-ahead auction which closed at 10.30 CET was 6,987 MWh. The prompt market is still open for trading and the so far traded volumes have exceeded expectations,” said Hans Randen, director trading in Nord Pool Spot.

"The good start for the N2EX market solution in the UK power market bodes well for the later launch of the derivatives market," commented Geir Reigstad, head of NASDAQ OMX Commodities.

N2EX will establish a reference price based on the physical market. The reference price will be the basis for its planned derivatives market.

N2EX is the result of a market initiative to inject liquidity back into the UK power market. In 2008, the Futures and Options Association (FOA) selected a consortium bid from Nord Pool Spot AS and NASDAQ OMX Commodities as a result of their extensive expertise. Nord Pool Spot runs the largest physical power market in the world, while NASDAQ OMX Commodities provides access to the world’s largest power derivatives exchange and one of Europe’s largest carbon markets, together with Nord Pool ASA.

Status Market Launch - N2EX letter to Transitional Market Council 28 August

To: N2EX Transitional Market Council ( UK market participants)

From: N2EX (NASDAQ OMX Commodities AS/ Nord Pool Spot AS)

Date: 8/28/2009

N2EX market trials ready to start 16 October.

The N2EX offering as originally accepted by the FOA, has been further developed and tailored to better suit the UK power market needs during the last months, following many valuable and appreciated discussions between FOA members and N2EX. N2EX expects that the UK power market solution, which includes the technical trading and clearing solution, the regulatory framework, the clearing procedures and Elexon approvals of clearing house requirements will be ready for market trial 16 October 2009. The market launch is subject to the Swedish FSA consent, appropriate approvals from Elexon and sufficient number of market participants being ready for trading and clearing on the platform. Regardless of the remaining clarifications, N2EX encourages participants to commence their mock trading and membership application processes now in order to be ready for trading at market launch.

Market launch date
The N2EX market will launch after successful market trials following Transitional Market Council approval. The market trial period will start 16 October.

STATUS MARKET COMPONENTS
The N2EX market offering will initially comprise the auction (day-ahead), continuous trading of prompt contracts (electricity contracts with physical delivery) and prompt OTC give-ups. N2EX has followed the Transitional Market Council’s recommendation of a staggered market launch, by introducing the Auction and Prompt trading with Prompt OTC give up first, and then introducing spot trading two - three months thereafter.

Technical solution
The TMC’s technical work group has accepted that the solution can be presented and distributed to the market in order to commence training. The remaining internal software development that is necessary to integrate the broker community will be completed in due time. The technical platform is already available on a test platform and will be launched on a go-live installation when the final broker community integration is completed. Small adjustments of the finalized technical solution could be required, but we do not foresee any challenges towards market trials 16 October. We also believe that the improved technical solution, integrating the broker community, will represent a major advantage to the market.

Clearing procedures
Risk models
Achieving our mutual goal of building a risk model that gives the market the confidence of a credible clearinghouse with sufficient collateral and risk coverage, while at the same time avoiding collateral requirements prohibitive for market development, has been a challenge for all parties. However, the existing specified models fulfill our common expectations and requirements for the initial market launch. As our practice in the Nord Pool market, the world’s largest power derivatives market, our comprehensive risk models will be adjusted and tailored to the UK market when we have more data on actual market behavior following launch. Evaluation and adjustments of risk parameters is a continuous and dynamic process, but the UK risk model principles are finalized and ready.

Bank interface
A simplified model for the collateral and banking arrangements has been introduced and the solution has been well-received by the market participants.
As a consequence of this, some of the banking agreements originally presented as part of the legal framework are no longer needed and the legal framework will be adapted to reflect the new setup.

Legal and regulatory framework
The clearinghouse merger between Nord Pool Clearing ASA and NASDAQ OMX Stockholm AB necessitated a need to change the N2EX counterpart from Nord Pool Clearing ASA to NASDAQ OMX Stockholm AB from the launch date, which was not planned initially. We strongly believe this change will benefit the UK power market as the merged clearinghouse will represent a stronger and full range CCP, however we apologize for any inconvenience this may cause for participants. With the move to NASDAQ OMX Stockholm AB as CCP from the launch date, the merger will not affect the UK clearing operations and the merger will have no impact on the launch date. Regulatory issues arising from the clearinghouse merger and/or the UK power project are currently being resolved with the Norwegian and Swedish FSAs. We will inform of the outcome and any developments in this respect as appropriate.