TradeSpark LP, the electronic and voice brokerage energy trading marketplace that debuted less than a year ago, said last week it had more than doubled its overall transaction volumes in just three months, trading more than $41.9 billion (notional value) in energy products in the second quarter, a 131% increase over the trades made in the first quarter of the year.
Headquartered in New York, TradeSpark began trading last October (see NGI, Oct. 2, 2000), through a partnership between TXU Energy Trading, Shell affiliate Coral Energy, Dominion Resources Inc., Koch Energy Trading Inc. and Williams Energy Marketing and Trading Co., along with Cantor Fitzgerald, a voice brokerage. It also expects to affiliate with DynegyDirect in the next few months.
For the second quarter, TradeSpark reported a 189% increase in natural gas traded, and a 29% increase for electricity over the first quarter’s numbers. It traded more than 6.8 MMBtu of natural gas instruments, with a notional value of more than $33 billion, and 155.3 million MWh of electricity instruments, with a notional value of approximately $8.2 billion.
“We’re gaining a good footprint in the marketplace, which was showing in the second quarter,” Mike Williams, TradeSpark’s managing director, told NGI. He said that opening an office in Houston has “clearly helped,” and was not surprised that the company has had “relative profit relatively quickly.” Now that the company has “gotten its foot in the door,” Williams said he expects even better returns in the next quarter. “We’re only grabbing the tip of the marketplace right now…the marketplace is creating its own volume.”
Williams declined to comment on any additions TradeSpark may make to its trading floor, or whether new commodities will be added in the future. However, he said there were “possible future market plans” that could be announced before the end of the year. “We’re always looking on the radar screen,” he said. “We like the model of market participation and electronic commerce.” TradeSpark has seen an increase in the number of trades executed electronically, and Williams said that it was a “clear indication that market participants value the speed and efficiency” it brings to energy trading.
Overall, TradeSpark’s average daily transactions are up 37% over the first quarter of 2001, and its electronic trades are up overall 30% over the first quarter. Its non-partner trading activity accounts for more than 50% of overall trading volume. On the natural gas side, average daily trading volumes are 100 million MMBtu, with a daily trading high of 406 million MMBtu on June 7, 2001. On the power side, its daily trading high was 5.06 million MWhs on May 26, 2001.
Powered by eSpeed, an end-to-end electronic trading system, TradeSpark can process up to 150 transactions per second, per instrument, with a 300-millisecond execution time. The customized system displays all prices on the system anonymously to all market participants, featuring a credit management tool, and a “Give-Up Matrixsm”, or GUM, that allows traders to act only on the prices of pre-screened counterparts that are acceptable to their credit assessment policies.
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