Draft Rules for amendment and supplement to the Rules for the operation of the organised electricity exchange market (Power Exchange Operational Rules) have been published for public consultation until 18 May 2023.
The main objective of the draft according to the Report is the regulation of a new mechanism for the management and limitation of financial risk for the operator by introducing a trading limit on short-term market segments, as a result of which the exchange operator will no longer set a required collateral. Trading participants will be able to conclude electricity purchase and sale transactions within the trading limit set by themselves. The limit will be common to the Intraday and Day-Ahead market segments. The initial trading limit per trading participant will be the difference between the value of the available collateral and the value of the minimum collateral. A Trading Participant’s Available Trading Limit at any point in time will be the difference between the Initial Trading Limit and the amount blocked by the “Check Trading Limits” functionality of the maximum value of the obligation that may be triggered by the registered bids and offers at positive prices and/or sales at negative prices and/or trades entered into at positive prices and/or sales at negative prices and/or the net amount of the Trading Participant’s obligations to the Exchange Operator. It is foreseen that the checking of bids and offers of trading participants on the Intraday and Day-Ahead market segments will be carried out automatically by means of the functionality “Check trading limits”, which will prevent the submission of bids whose maximum value exceeds the available limit of the trading participant.
The introduction of a new mechanism to manage and mitigate financial risk for the operator by introducing a trading limit on short-term market segments is appropriate and suitable in the view of the IBEX not only for higher market volatility and to achieve higher clearing prices but, more generally, will minimise the risk of default by trading participants who will determine the size of the trading limit themselves and better plan their bid submissions, trades and cash flows. In particular, the risk for the exchange operator of a trading participant falling into insolvency will be minimised due to the impossibility of participants incurring cash liabilities that cannot be discharged through the realisation of the fast liquid collateral provided to IBEX EAD.
It is expected that the proposed changes will largely improve the long-term financial stability of the exchange operator and prevent the emergence of potentially adverse consequences for the organised electricity exchange market, which will also lead to overall lower operating costs.
To the draft document: here.