European Energy Exchange CEO Discusses Industry Trends and Growth Strategies at FIA Conference

Описание: Peter Reitz, CEO of the European Energy Exchange (EEX), was interviewed by John Lothian News at the FIA International Futures Conference in Boca Raton, FL, where he discussed significant shifts in the energy sector and the impact of innovative solutions like solar peak futures.

Reitz said that growth at EEX has been driven by the trend from over-the-counter (OTC) to cleared exchange trading, which has been intact for more than 10 years and is still growing, particularly accelerated by the recent price crisis as clearing is on everyone's mind.

Another significant factor has been the influx of new customers. According to Reitz, EEX has welcomed 80 new customers, augmenting the existing network of 800 clients hailing from 40 different countries that comprise the EEX liquidity network. Notably, this expansion encompasses various customer types, including high-frequency traders in the European power markets, leveraging the increased market liquidity to implement their strategies, he said.

Reitz said that the Japanese power market, established just four years ago, stands as the fastest-growing segment within EEX. He attributed this growth to the collaboration between the 800 EEX customers and local players in Japan, which has propelled market expansion. Reitz pointed out record-setting volumes in January and February, emphasizing that the market is still in its early developmental stages and is twice the size of the German market.

Reitz spoke about the success of EEX and Nodal Exchange's success, working with partner InCubex, which includes offering the broadest set of environmental products of all exchanges. He attributed their success to meeting client demands by expanding product offerings and enhancing distribution channels, which has been instrumental in driving growth. Additionally, Reitz said that trading environmental markets alongside power markets provides clients with margin offsets, further contributing to their success.

Declining volumes in Scandinavian power markets over the last decade led to the development of Nordic Zonal futures, which simplify the product offerings for that market. EEX offers Nordic Zonal Futures in each of the individual price zones across Scandinavia and a pan-Scandinavian price index. Spreading zones versus the index or other zones are some of the trading possibilities, he said.

"So if you're a trader in Denmark, you can trade spreads between the different Danish price zones, between the Danish price zone and the Scandinavian price, but also between Denmark and Germany, which is a very liquid market, and they're very highly correlated," Reitz said.

Reitz discussed EEX's initiative with the Turkish Energy Exchange to establish an emissions trading system, emphasizing their global engagement in addressing CO2 price discovery mechanisms. "We have extensive experience, having operated emissions markets in Europe for over 20 years," he said. As an example, Reitz highlighted EEX's collaboration with a local partner to oversee the emissions market for the New Zealand government.

Lastly, Reitz spoke about this year's InterMarket Ski Week, saying there was some new snow during that week. However, he said the effects of global warming can be seen by the shortened season.


QUESTIONS
What is driving the growth at the European Energy Exchange (EEX)?
The Japanese power market saw increased volume in 2023 what is driving its growth?
How are EEX and Nodal exchange growing volumes in the energy markets?
What can you tell me about Nordic Zonal Futures and how they fit into the current index offerings?
What are the hurdles in creating an emissions trading system for the Turkish energy exchange EPİAŞ?
How was this year’s EEX Skiing event, and did climate change affect the amount of snow you had?

00:00:00 - Transition in Energy World
00:00:44 - Growth Drivers in the European Energy Market
00:02:03 - Expansion in Japanese Market
00:03:02 - Growth Strategy of EEX and Nodal Exchange
00:03:48 - Introduction to Nordic Zonal Futures
00:05:51 - Global Efforts for CO2 Price Discovery
00:07:01 - Personal Experience with Climate Change