With more and more energy trading companies joining the ranks of their credit-troubled counterparts in the industry, Houston-based EnergyClear Corp., the first independent U.S. energy clearinghouse registered with the Commodity Futures Trading Commission, said Thursday it has established a new category of membership for merchant energy trading companies facing credit rating downgrades.

Energy trading companies under this new membership category will have access to EnergyClear’s centralized clearance and settlement of over-the-counter (OTC) energy transactions even though unrated or lower-rated companies would not otherwise typically qualify for clearinghouse membership.

In addition, EnergyClear said it will make available Virtual Markets Assurance Corp.’s (VMAC) system of financial guarantees, provided by Financial Security Assurance Ltd. (FSA), covering both VaR and mark-to-market amounts to members beginning in the first quarter of 2003. “It is intended that such a program would provide significantly increased coverage for energy trading risks not fully protected by the traditional clearinghouse structure,” EnergyClear said.

The company said it receives operations and technology support from EnergyClear Operations Co. LLC, an independent, for-profit services company. EnergyClear operates on a not-for-profit basis and charges transaction fees to its members in order to pay the costs associated with the services provided by EnergyClear Operations Co. The limited liability company provides a real-time collateral check function and the provision of other risk management technologies to EnergyClear for the benefit of its members.

EnergyClear provides multi-lateral clearance and settlement of OTC energy transactions directly to its members, with the benefits of multi-lateral netting and trade guarantees. The company launched its new system in early October billed as the first industry-owned and operated OTC energy clearinghouse for clearance and settlement of OTC electricity and natural gas trades (see Daily GPI, Oct. 7).

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