Trading at the European Energy Exchange (EEX)

EEX : History | Membership | Types Traded | Further Reading

The Leipzig, Germany situated European Energy Exchange (EEX) is one of the world commodity market’s newer exchanges, but given the energy shortages likely to arise in the next few decades it could promise to be one of the most important. Secure, reliable energy supplies will be essential for economic growth, and the countries that have access to reliable supplies of energy commodities will have an advantage in this area.

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History of the European Energy Exchange

The European Energy Exchange in its present was established in Leipzig in 2002 as a result of the merger of two previously existing exchanges: the Leipzig Power Exchange, and the European Energy Exchange located in the German financial capital, Frankfurt. This merger was intended to create an exchange that would be the first choice for energy commodities and Emission Trading in central and western continental Europe.

In addition, a number of times in the last decade, due to Russia’s disputes with its neighbours (primarily the Ukraine), central Europe’s energy supplies have been threatened. The creation of the European Energy Exchange may be regarded as a response to this threat by European policymakers: the new, larger exchange is much more capable of responding to fluctuations in supply, by virtue of economies of scale such as the widening of the pool from which energy supplies are drawn.

Membership of the European Energy Exchange

Membership of the European Energy, allowing trading and other privileges, is available to individuals and organisations that satisfy certain preconditions and then fully complete the application process.

Preconditions include:

  • Provision by applicant organisation or individual of liable equity to the value of a specified amount, €50000 at time of writing.
  • Proof of relevant professional qualifications for the trader or traders.
  • Proof of personal reliability of the trader or traders.
  • At least one trader in the organisation has passed the relevant EEX trader examination or examinations, and has been appropriately licensed.
  • The company or individual has the technical infrastructure necessary to enact transactions via EEX’s systems.
  • European Commodity Clearing AAG (ECC) has recognised the organisation or individual as a trading participant.

Additionally, it is necessary for a separate application to be made for each EEX market through which the trader or trading organisation wishes to enact transactions: more information on this is given in the subsequent section on commodities traded on the exchange.

Commodities Traded on the European Energy Exchange

As may be surmised from its name, the main commodities traded on the European Energy Exchange are energy commodities. The EEX is also a centre for the emerging trade in environmental commodities. The commodities traded on this exchange are:

These commodities are traded on two separate markets, the EEX Spot Market and the EEX Derivatives Market. Aside from the nature of the transactions carried out on them, these markets differ in terms of the products traded:

  • EEX Spot Market: Emission Rights, Natural Gas.
  • EEX Derivatives Market: Coal, Emission Rights, Natural Gas, Power.

The Power Spot Market deals with power generated in Austria, France, Germany and Switzerland (through the Paris located EPEX Spot SE), while the Power Derivatives Market deals with power from France and Germany (through EEX Power Derivatives GmbH, in Leipzig).

Further Reading

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