N2EX introduces a new version of the legal rulebooks for the N2EX market
Lysaker, 30 November 2010
N2EX introduces a new version of the legal rulebooks for the N2EX market. The main changes are as follows:
The new rulebook supports a staggered auction for weekends and bank holidays, as discussed with and supported by the N2EX market council. The trading schedule and the auction regulations have been updated accordingly. The staggered auction has been announced earlier and the changes will come into effect on 3 December 2010 as the first staggered auctions are also held.
The fee schedule has been updated to include week and month contracts with corresponding fee reductions on such contracts, also as discussed with thenN2EX market council. The fee reductions, that have been announced earlier, will come into effect from 1 December 2010.
It was originally contemplated that the N2EX rulebook could also function for an N2EX financial derivatives market. It has now been established that the N2EX financial derivatives will be listed by NASDAQ OMX Commodities Europe, using its legal framework for both trading and clearing. As a consequence, references to a “financial market” have been generally removed from the N2EX rulebooks. This has also resulted in some of the “physical” definitions becoming obsolete and consequential changes throughout the rulebook. No substantial changes have been made or are intended as a consequence of this change.
Certain additional provisions relating to rejection and devaluation of collateral have been introduced in sections 5.4.6 and 5.4.7 of the general terms of the clearing rules. This is to enable the clearinghouse to downgrade certain “degraded” collateral in case of insolvency or credit downgrade etc of the collateral provider or holder.
There is no longer a requirement to provide unsolicited financial information to the clearinghouse on an ongoing basis. Instead, such information (and other relevant information) shall be provided at the request of the clearinghouse.
The provisions of the previous section 13.5 of the general terms of the clearing rules relating to retention of claims, set-off and enforcement have been consolidated into section 13.2, which now applies generally in the case of default by all account holders. Subsequent changes have been made to sections 13.3 through 13.4 to avoid duplicate and redundant provisions. The change entails no real amendments but attempts to clarify and harmonize the N2EX clearing rules with the new (forthcoming) rulebook applying to the financial derivatives market of NASDAQ OMX Commodities Europe.
The amendment procedures of both the trading and clearing rulebooks have been somewhat modified/clarified, see section 15 of the trading rules and section 17 of the clearing rules.
The clearing membership application procedures (clearing appendix 3) have been consolidated and clarified and now apply jointly to all membership categories.
The rules relating to the use of transaction information have been somewhat modified concerning the sharing of transaction information with legal entities who are assisting members in their trading and/ or clearing operations provided the transaction information is not used for other purposes.
The collateral security deed template previously included a possibility for a “collateral pool” between members through a trust with the clearinghouse acting as a security trustee, subject to further implementation of such mechanisms in the clearing rules. Neither the current nor the draft versions of the clearing rules contain any such implementation, and the setup has therefore caused some confusion with applicants. Upon further consideration this mechanism has been removed from the templates altogether. Current agreements will not be affected by the change, however references to a trust in current collateral security deeds should be considered as “dead links”.
Some minor changes and clarifications have been made to the other agreement templates and in other parts of the rulebooks based on questions that have arisen in the membership processes and our experience with executing agreements based on the previous templates. The aim of these changes has been to clarify the existing framework and to further improve the membership process. The changes are insignificant and existing agreements are not affected by the changes to the agreement templates. Any future agreements must however be based on the updated agreement templates.
Other than as set out above the changes will come into effect on 15 December 2010.
December 2010 version of legal framework
For further information, please contact N2EX:
Eivind Grimsø Moe, legal counsel, NASDAQ OMX Commodities,
phone +47 6752 8084/+47 9112 0355
Press contacts:
Siw Hauge, Director Communications, Nord Pool Spot, phone + 47 9061 5992
Trine Fersnes Riccardi, Director of Communications, Corporate Communications,
phone +47 6752 8080/+47 9574 7497
About N2EX
N2EX is the name of the UK power market offering from NASDAQ OMX Commodities and Nord Pool Spot. NASDAQ OMX Stockholm AB is the authorised clearing house.
The web site, www.n2ex.com, provides market information and documentation for the UK power market.
About NASDAQ OMX Commodities
NASDAQ OMX Commodities is the brand name for the NASDAQ OMX Group’s worldwide suite of commodity related products and services. The NASDAQ OMX Commodities offerings include power, natural gas and carbon emission markets and clearing services. NASDAQ OMX Commodities is a trademark of the NASDAQ OMX Group, Inc.
NASDAQ OMX Commodities Europe is a secondary name of NASDAQ OMX Oslo ASA, and is authorised as a commodity derivatives exchange by the Norwegian Ministry of Finance and supervised by the Norwegian Financial Supervisory Authority.
The clearing house, NASDAQ OMX Stockholm AB, is authorised and supervised as a multi-asset clearing house by the Swedish Financial Supervisory Authority in Sweden as well as authorised to conduct clearing operation in Norway by the Norwegian Ministry of Finance.
NASDAQ OMX Commodities has more than 370 members from almost 20 countries covering a wide range of energy producers, consumers and financial institutions.
For more information, please visit www.nasdaqomxcommodities.com.
About Nord Pool Spot
Nord Pool Spot runs the largest market for electrical energy in the world, offering both day-ahead and intraday markets to its participants. 330 companies from 20 countries trade on the exchange. The Nord Pool Spot group has offices in Oslo, Helsinki, Stockholm, Fredericia (Denmark), Tallinn and London. Nord Pool Spot is owned by the Nordic transmission system operators. In 2009, the group had a turnover of 288 TWh representing a value of EUR 10.8 billion.
For more information, visit www.nordpoolspot.com.
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