Electronic Trading Systems Wage Price War
The two major electronic natural gas trading systems have
started a price war, slashing transaction fees to zero at multiple
locations for the month of September. In late August, Altra Energy
Technologies announced a "Streamline Inventory Reduction Sale,"
reducing prices to $0.001/MMBtu at all its major Louisiana and
Texas locations and dropping fees to zero at all of its other
trading points. Soon after, QuickTrade countered by dropping fees
to $0.001/MMBtu from $0.025 for day trades at major Louisiana an
Texas points and Chicago, and cutting costs to zero for day trades
at the Columbia Gas pool and the Henry Hub.
"We've reacted in a limited way to Streamline's across the board
reductions. They called it an inventory reduction sale, but I'd
classify it as a going out of business sale," said QuickTrade's
Jeff Taylor. "It appears to be a rather desperate measure on their
behalf," he added, claiming QuickTrade handles about double the
volume of Streamline. "They can't maintain these low fees and stay
"Nothing could be further from the truth," said Altra President
Rusty Braziel. "Our volumes have been very good. They've been great
for the last three months, especially the last three weeks," he
said disputing QuickTrade's claim about doubling Streamline's
Taylor said QuickTrade hasn't noticed any reduction in volume or
transactions since Streamline slashed its rates. Prior to the price
war, QuickTrade said it had record volumes, with 113 Bcf traded in
August, and a single day record of 13.4 Bcf on Aug. 20. On average,
Taylor said the system handles about 5 Bcf and 200 trades daily at
its 140 locations.
"I would question that," said Braziel. "If you include what we
do on an average daily basis with what our partner does in Canada,
it's going to be 4 or 5 Bcf/d. I know we've done a record day of 10
"It's a competitive marketplace and we plan to win this game,"
said Braziel. "Our objective is to encourage as much trading
through our system as we can. The pricing actions that we've taken
are a short-term thing, a promotional thing and a competitive
issue. That's probably about as far as I need go with talking about
David Hanson, QuickTrade's vice president of marketing, said,
"We have seen an upward trend in trading activity throughout the
year and we believe it is indicative of the growing acceptance of
electronic commerce as a convenient tool for busy traders." Points
with the greatest liquidity on QuickTrade include Chicago, Tco IPP
and Alberta. Quicktrade has handled $1.2 billion in transactions so
far this year.
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