NASDAQ Commodities stiffens collateral rules
Nasdaq Commodities, the electricity derivatives market based in Stockholm, is revising the rules of its clearinghouse in order to comply with new requirements under the European Market Infrastructure Regulation. The exchange announced in April that its clearinghouse will stop accepting bank guarantees as collateral starting in February, forcing its market participants to use other types of collateral.
Nasdaq Commodities noted that bank guarantees have been a “pillar of the Nordic power market” for 20 years and have been the “most cost-efficient type of collateral” for non-financial market participants.
To ease the impact, Nasdaq is planning to list a new slate of power futures after September. The new contracts will trade in parallel with the existing deferred settlement futures, which are essentially traded as forward contracts, but will be more “capital efficient,” the exchange said.
The exchange also is working to expand the availability of clearing through general clearing members. The exchange encouraged non-financial companies to consider this model, saying it could improve their clearing operations as well as reducing the negative effects of the loss of bank guarantees.
