Competition Among Trading Platforms Heats Up

The battle lines are forming as competition for recognition as the top online energy trading platform heats up. The Energy Trading Platform Holding Company (ETPHCo.), comprised of six of the leading power and natural gas trading companies, has entered into a deal to purchase an interest in Atlanta-based IntercontinentalExchange, which claims to be the world's largest Internet-based, over-the-counter (OTC) marketplace for energy and metals.

In addition to purchasing an interest in the Exchange, each of the partners has committed to a significant level of annual participation to provide liquidity. American Electric Power, Aquila Energy, Duke Energy, El Paso Energy, Reliant Energy and Southern Company Energy Marketing make up the six new partners of the online trading platform. The six energy companies formed ETPHCo. in April to create an independent power and natural gas trading exchange (see NGI, April 17).

In 1999, the companies accounted for the trading of approximately 1 billion MWh and 42 Bcf/d in North America. The deal comes just weeks after EnronOnline, currently the top volume gas and power exchange, formed alliances with two other energy trading platforms, and (see NGI, July 17).

The original company of Continental Power Exchange, developed the trading platform software in-house in early-2000. The software called The ICE, is a scalable trading system which will allow users secure, anonymous, access with global trading support at all hours through the business week, the company said.

Continental then approached major commodity trading firms to secure liquidity. The result was the formation of IntercontinentalExchange, which included BP, Deutsche Bank, Goldman Sachs, Morgan Stanley Dean Witter, Royal Dutch/Shell Group, SG Investment Banking and Totalfina Elf. IntercontinentalExchange joined the flood of start-up online energy trading sites in March as an oil and precious metal trading platform (see NGI, March 27).

Precious metals will begin trading spot, forwards and options online at in August. Natural gas, oil and power will follow with a start-up time in the fall. The exchange will be open to the whole commercial market, with no memberships or fees, just trade charges, the company said.

"The expanded IntercontinentalExchange will enable users of our system to trade virtually the entire OTC energy complex - oil, power, and natural gas - across a single platform, and on a global basis," explained Jeffrey Sprecher, Intercontinental's CEO. "With the quality, breadth and sheer volumes that our partners bring to the market, we will be able to offer traders real-time access to liquidity and capture a significant portion of the vast market for OTC commodities brokerage."

Alex Steis

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