After going live on Dec. 6 with over-the-counter (OTC) trading of UK natural gas on its system, IntercontinentalExchange (ICE) said the new offering is off to a strong start with 115 trades at the National Balancing Point (NBP) hub with volume of 205 million therms.
“There is clearly a tremendous interest in trading UK gas on ICE’s electronic trading platform” said Jeffrey Sprecher, CEO of IntercontinentalExchange. “It is very encouraging to have such broad participation — 14 counterparties — at this early stage.” ICE said that trading was lively throughout the curve, from same day to summer 2004 deals, with almost 78 million therms changing hands in the most active market, Summer 2002.
Earlier this month, IntercontinentalExchange reported that it had entered into agreements with eight leading firms engaged in the sale and trading of UK natural gas including BP Gas Marketing Limited, Entergy-Koch Trading Ltd, Gaselys (the newly created Gaz de France/SociÃ©tÃ© GÃ©nÃ©rale joint venture), Powergen UK plc, Shell Energy Trading Limited, Scottish and Southern Energy Group, TotalFinaElf Gas & Power Limited, and TXU (see NGI, Dec. 10). These eight companies have committed trading to support initial levels of liquidity to the new ICE energy markets.
The exchange also said that it has faced a wave of customer sign-ups as a result of Enron’s problems. A large amount of Enron’s business, including its European trading, went through EnronOnline, which was shut down late last month, and only recently resumed limited transactions. Following Enron’s bankruptcy filing on Dec. 2, ICE transactions have risen by 65% as companies cut off Enron and began to trade on alternative platforms.
ICE said that expanding into the European energy markets is part of its overall strategy to become a global electronic marketplace for a broad range of cash, OTC and exchange traded commodity products. Initially, ICE is trading gas at the UK NBP, with potential future plans to expand rapidly into other European gas delivery hubs as they develop into liquid markets. The company also expects to said it plans to expand into additional power hubs in the near future. 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.
Continuing to gain in the absence of a viable EnronOnline, ICE also said that its online trading platform set a new single day North American power trading record of 16.7 million MW on Dec. 11, breaking the previous record by more than a million MWh.
The company said that recently launched additions to the ICE power market contributed to that record volume. ICE said the addition of power for delivery into AEP and into Southern hubs, as well as hourly, off-peak, and weekend power markets at several hubs in the West and the East helped set the record.
The exchange added that the number of bids, offers and price changes on the system are still at a high, with new user requests continuing to come in at a rapid rate.
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