The Nasdaq Commodities members have been using bank guarantees as collateral since the 1990s. This has been a pillar in the Nordic power market structure for 20 years and has played a significant role as the most cost efficient type of collateral for our members. Indirectly, bank guarantees have contributed to the transparent, liquid and efficient market place that has become the benchmark for all power markets developed over the last two decades. This has led to the Nordic financial power market being close to 100% cleared.
During the last years the European regulatory landscape has changed and EMIR has set some new standards for how all financial markets should operate. Currently, non-financial members may use bank guarantees as collateral for CCP clearing of power and gas derivatives, without the guarantees being fully backed. In March 2016 a requirement for full backing with relevant collateral will come into effect. Nasdaq together with a joint group of stakeholders are urging the regulators to maintain the current bank guarantee solution post March 2016. The requirement for full backing, in practice negates the use of bank guarantees where the non-financials need to post further collateral in addition to a bank guarantee.
Prepare for phase-out of Bank Guarantees
Even though Nasdaq and the joint group of stakeholders, including the Nordic and Baltic governments, are trying to influence the regulators to maintain the current bank guarantees after March 2016, the decision to keep the current set-up is out of Nasdaq’s control.
In order to allow for an organized transition from the present activities, to a time when the current bank guarantees are not permitted, the necessary preparations must begin. Nasdaq is therefore requesting all members using bank guarantees as collateral to give an indication by June 17, 2015 whether they intend to replace bank guarantees with other eligible collateral or whether they are choosing another clearing model. By September 15, 2015 members must give Nasdaq their final decision in regards to which alternative they have chosen. Please contact your Key Account Manager at Nasdaq for further information.
On February 28, 2016, non-backed bank guarantees will be removed as eligible collateral from the collateral list of Nasdaq Clearing’s Rules and Regulations.
More information regarding the phase-out process and the deadlines will be presented during the coming month.
Initiatives to reduce and/or eliminate any negative effects
In parallel with the ongoing work to maintain guarantees, and the phase out preparations, Nasdaq is also working to find good solutions for members to alleviate some of the pressure of the new challenges that have arisen in the last few years. Nasdaq has initiated/completed a number of initiatives to ensure that the Nordic power derivatives market will avoid a lengthy situation of uncertainty. These initiatives will contribute to reduce and/or eliminate any negative effects from the loss of continued use of bank guarantees for non-financial companies.
-
Nasdaq is working to expand the GCM offering for on-boarding existing members. A GCM structure may in fact improve the members' clearing operations as well as reducing some negative effects of the loss of bank guarantees.
-
Nasdaq is preparing to list Futures contracts in parallel with the existing DS Future contracts (month, quarter and years), thus, for those members who would find it beneficial, this improves capital efficiency. Nasdaq is ready to list Futures after September 2015.
If the preferred solution is to become either an NCM or a client under a clearing member, Nasdaq would like to take the opportunity to remind members to contact their local bank and request a Nasdaq clearing solution. Nasdaq will take all necessary steps to make the transition from the current bank guarantee set-up to a new set-up as easy and smooth as possible.
For further information, please contact Nasdaq Commodities:
Key Account Managers:
Knut Rabbe, Head of Sales Commodities Nordic, phone +4767528032/+4793220800, knut.rabbe@nasdaq.com
Morten Refsdal, Sales Executive Commodities, phone +47 67 10 84 16/+47 930 84 425, morten.refsdal@nasdaq.com
Product Director:
Anne-Marit Rudby, Product Director Commodities, phone +47 9158 0323, anne-marit.rudby@nasdaq.com
Media contact:
Sara Aadnesen, Director Corporate Communications, phone +47 9060 0759, sara.aadnesen@nasdaq.com
About Nasdaq
Nasdaq (Nasdaq: NDAQ) is a leading provider of trading, exchange technology, information and public company services across six continents. Through its diverse portfolio of solutions, Nasdaq enables customers to plan, optimize and execute their business vision with confidence, using proven technologies that provide transparency and insight for navigating today’s global capital markets. As the creator of the world’s first electronic stock market, its technology powers more than 70 marketplaces in 50 countries, and 1 in 10 of the world's securities transactions. Nasdaq is home to more than 3,500 listed companies with a market value of over $8.8 trillion and more than 10,000 corporate clients. To learn more, visit www.nasdaq.com/ambition or www.nasdaqomx.com.
About Nasdaq Commodities
Nasdaq Commodities is the brand name for the worldwide suite of commodity related products and services offered by Nasdaq. The Nasdaq Commodities offerings include power, natural gas and carbon emission markets, tanker and dry cargo freight, fuel oil, seafood derivatives, iron ore, electricity certificates and clearing services.
NASDAQ OMX Oslo ASA is the commodity derivatives exchange authorized by the Norwegian Ministry of Finance and supervised by the Norwegian Financial Supervisory Authority. All trades with NASDAQ OMX Oslo ASA are subject to clearing with Nasdaq Clearing.
About Nasdaq Clearing
Nasdaq Clearing is the trade name of NASDAQ OMX Clearing AB which is authorized and supervised as a multi-asset clearinghouse by the Swedish Financial Supervisory Authority in Sweden as well as authorized to conduct clearing operation in Norway by the Norwegian Ministry of Finance.
For more information, visit www.nasdaqomx.com/commodities
The information contained above is provided for informational and educational purposes only, and nothing contained herein should be construed as investment advice, either on behalf of a particular security or an overall investment strategy. Neither The NASDAQ OMX Group, Inc. nor any of its affiliates makes any recommendation to buy or sell any security or any representation about the financial condition of any company. Statements regarding Nasdaq-listed companies are not guarantees of future performance. Actual results may differ materially from those expressed or implied. Past performance is not indicative of future results. Investors should undertake their own due diligence and carefully evaluate companies before investing. ADVICE FROM A SECURITIES PROFESSIONAL IS STRONGLY ADVISED.