About the market
Moscow Energy Exchange is the first exchange marketplace in Russia for trade in derivative financial instruments on electric power.
The Exchange is a legal entity established as an open joint-stock company and carries out its business based on these Articles of Association and Russian applicable law.
Wholesale electric power and capacity market (WEPCM) model requires from power engineers a professional approach to organization and planning of electric power production and consumption, price fluctuations risk assessment, ability to forecast and timely insure (hedge) them through liquidity market of financial contracts.
The main purpose of the Derivatives Market of Moscow Energy Exchange is to give to participants of WEPCM and retail electric power market exchange instruments (futures contracts) with the help of which producers of electric power receive possibility to fix for themselves an acceptable price for sale of electric power for future periods, and consumers receive possibility to level price fluctuations thus providing stability of prices for a definite period.
Factors which influence fluctuation of prices for electric power, risks of market participants, practical use of futures are given in presentation.
Technology and instruments
Trades are performed by monthly contracts which underlying assets are the Average Price Indexes for Electric Power in Hubs. The technology of trades is given in presentation.
Time of trades
14.00—14.03 Intermediary clearing session (daily clearing)
18.45—19.00 Evening clearing session
19.00—23.50 Trades. Evening trading session (next business day)
Guarantees of deal execution
In order to guarantee futures contracts execution for participants Moscow Energy Exchange entered into a contract with respect to engagement a highly capitalized specialized clearing agency — NCC Clearing Bank as a central counterparty in deals.
Advantages of trade in futures
- possibility to hedge risks of negative change in price at the electric power market (hedging);
- forming of predictable money flows;
- guarantees of deal performance;
- low diversion of funds for performance of operations at the futures market;
- low transaction costs;
- possibility of conducting high-yielding (speculative) operations;
- possibility of conducting arbitrage operations between different segments of electric power market;
- possibility to trade till 23:50 Moscow time;