Electronic commodity exchanges such as TradeSpark LP, IntercontinentalExchange (ICE) and Dynegydirect have gained significant market share over the past few weeks as EnronOnline has fallen out of favor due to Enron’s financial turmoil, failed merger with Dynegy and subsequent bankruptcy filing.

Almost three months after TradeSpark lost half of its staff when the towers of the World Trade Center collapsed on Sept. 11, the company reported that it has seen steady growth in activity and participants on its electronic energy marketplace for the trading of a variety of energy products. In addition, the company said it saw a “significant jump” when EnronOnline went offline last week.

“We have half the number of staff that we had Sept. 10, but are now doing more business than we were previous to Sept. 11,” said Mike Williams, managing director of TradeSpark. “We were actually seeing an increase in business [since Sept. 11] without the Enron situation…when we were back up Sept. 21.” However, he said there was “clearly a jump in the last week or so since Enron’s demise.” Williams said statistics will be released at the end of the quarter as usual.

TradeSpark, a partnership formed by eSpeed, Inc., Cantor Fitzgerald and five of the largest energy producers/distributors, resumed full electronic trading operations for all energy commodities from its back-up offices in New Jersey an amazing 10 days after its main offices in the World Trade Center were destroyed by terrorists. The company vowed that it would continue to offer voice-assisted brokerage of energy products to enhance its electronic marketplace.

“We’ve been tested in the ultimate way,” Williams told NGI. “We wish from the bottom of our hearts that we had not been tested in such a severe manner. But our [goals] were redundancy and robust capability and we have performed as well as anybody could have expected, with e-Speed bringing up TradeSpark inside 10 days (see NGI, Oct. 1). We actually had other products up on e-Speed inside three days. The only reason that it was 10 days for TradeSpark was that we had a request from the government that treasuries should come up rather quickly.”

Going forward, Williams said TradeSpark’s mission has remained the same. “We have been fairly vocal actually about our marketplace [being] a neutral marketplace. A marketplace is all things to all people and does not have a favorite player,” he said. “It has to be multi-lateral…which seems to be the way the marketplace wants to go now.”

ICE reported that natural gas volumes on its system set a new daily record last Tuesday with a total of 422 Bcf traded. “Over the past couple of weeks, we have seen a steady increase in natural gas trading,” said ICE COO Chuck Vice. “Last week, the [December] bidweek for natural gas volumes increased by 40% over [November’s] bidweek. This week we have continued the trend with strong volumes across the board and a record trading day in natural gas.”

ICE reported that the number of bids, offers and price changes on the system has doubled, while the number of new user requests is up 400% from two weeks ago. A spokesman for ICE said that business has really boomed since EnronOnline went offline. “I have not set the phone down since I got in today,” he said. “I have been answering messages with people pleading that they had to get on [sign up for] the system now!” The spokesman said the system has added 600-700 customers since last week, with transactions up 67%. A week ago the system did 2,500-2,700 transactions a day; now the company is processing 3,700-4,000.

Dynegydirect said that while it only reports transaction volumes and related data quarterly, it acknowledged that it has also been experiencing a business boom after Enron’s difficulties.

“Since Oct. 1, volumes on Dynegydirect have significantly increased and we have seen significant increases in physical business,” said Steve Stengel, Dynegy spokesman. “The number of customers accessing Dynegydirect has doubled and the number of customers executing electronic trading agreements is up 20%.”

Wanting to provide customers self-service access to bid and offer prices for a range of energy and communications products. Dynegy launched its B2B trading site in November 2000 (see NGI, Oct. 23, 2000). After only six weeks of operation, Dynegydirect said that it had already exceeded $1.5 billion in online notional transactions, with more than $1 billion of the energy and communications commodity transactions generated by new customers. After just six weeks, the site also had more than 400 registered users (see NGI, Dec. 18, 2000).

On Wednesday, TradeSpark announced the addition of hourly power and balance-of-the-day instruments in all regions to its suite of online products. TradeSpark said it is the first multi-lateral, neutral exchange to offer these products to the market.

Initially, the exchange said it will offer on-peak and off-peak physical hourly power instruments for all 24-hour periods at major interconnects within the West Coast, Midcontinent and South regions. It also will offer on-peak and off-peak financial hourly power, including balance of the day strips, for all 24-hour periods at major interconnects within the East Coast region.

“The addition of hourly power and balance-of-the-day instruments is in direct response to our customers’ need for these products and an excellent addition to the TradeSpark marketplace,” said Williams. “The market is becoming increasingly interested in and dependent on electronic multi-lateral platforms like TradeSpark, and we believe that the addition of these products will be one more reason customers will come to us to execute their trades.”

Currently, Williams said the majority of TradeSpark’s trading in the gas market is financial, but he said the exchange expects to do an increasing amount of physical gas business. Due to customer response, “there is clearly a need for it,” he said.

TradeSpark currently offers a variety of natural gas, electricity, coal and emissions allowances trade types on its system, and is expected to include weather in the future. Williams said that before the events of Sept. 11 they had purchased a small weather broker that was configuring a weather system for a September release on the TradeSpark platform, but that was lost with the World Trade Center.

“We are not going to recreate the New York office in terms of brokering,” Williams said. He added that TradeSpark will continue to have a sales office in New York, but the voice brokering presence is going to be concentrated in Houston.

As an open-access, multilateral electronic marketplace, ICE said it has built a strong track record of offering increased liquidity and transparency to OTC market participants. To date, over 400 of the world’s largest commodity trading firms are now ICE participants. ICE also made an announcement last week regarding a new service.

Continuing its rapid expansion into the void left by EnronOnline, ICE is making a move into the European over-the-counter gas and power markets with the introduction of markets for UK natural gas-related products in December.

ICE has entered into agreements with a number of firms engaged in the sale and trading of UK natural gas: BP Gas Marketing Limited, Entergy-Koch Trading Ltd, Gaselys (the newly created Gaz de France/ Societe Generale joint venture), Powergen UK plc, Shell Energy Trading Limited, Scottish and Southern Energy Group, TotalFinaElf Gas & Power Limited, and TXU. The eight companies will act as a catalyst for the new platform by committing trading to support initial levels of liquidity to these new ICE markets. ICE successfully employed this strategy earlier this year in the U.S. natural gas market.

“Expanding into the UK energy markets is part of our overall strategy to become a global electronic marketplace for a broad range of cash, OTC and exchange traded commodity products,” said ICE CEO Jeffrey Sprecher. “With the initial support of these eight trading companies, I am looking forward to this being a strategic stepping stone towards a growing ICE presence in Europe.”

Initially, ICE will trade gas at the UK National Balancing Point (NBP), with potential future plans to expand rapidly into other European delivery hubs as they develop into liquid markets. Currently, ICE actively trades gas at over 100 US delivery hubs, including the well-known Henry Hub. Following the rapid rate of acceptance by the North American power and gas markets of the ICE daily price indices that were launched at the end of July, ICE intends to develop European gas indices as well.

“Europe’s energy markets are developing rapidly and the introduction of a robust and proven electronic system that offers such excellent services coupled with the promise of significant levels of liquidity is very welcome,” said Uday Narang, managing director of European trading at Entergy-Koch Trading Ltd.

In September, Dynegydirect announced its entrance into the United Kingdom energy market (see NGI, Sept. 10).

“The launch of Dynegydirect in the UK reflects the increasing demand for Dynegy’s products in Europe as well as the successful launch of Dynegydirect in North America last year,” said Gary Cardone, president of Dynegy Europe Limited. “Dynegydirect-UK extends our global reach through customized electronic solutions that will enhance Dynegy’s position as a leader in the energy marketplace.”

Dynegy said its customers in the UK will now have self-service access to Dynegy’s bid and offer prices for UK power in the English and Welsh electricity market and UK natural gas at the National Balancing Point. Dynegydirect’s scalable architecture will enable additional markets, products and services from Dynegy’s business segments to be continuously added to the portal’s portfolio. For example, North American customers can now trade coal, emission allowances and broadband and purchase wholesale propane on Dynegydirect.

Dynegydirect is a commission-free, Internet portal and commercial business site for energy and communications commodities.

ICE is based in Atlanta, with offices in New York, Houston, Chicago, London and Singapore.

In addition to eSpeed Inc. and Cantor Fitzgerald, TradeSpark’s energy partners are Coral Energy, Dominion, Koch Energy Trading Inc., TXU Energy Trading, and Williams Energy Marketing and Trading Co. Active TradeSpark marketplace participants include Dynegy Inc., Entergy and other major energy traders. The system is open to all participants.

©Copyright 2001 Intelligence Press Inc. Allrights reserved. The preceding news report may not be republishedor redistributed, in whole or in part, in any form, without priorwritten consent of Intelligence Press, Inc.