Energy suppliers want an OTC market on the OPCOM

For more than a year, Romanian private energy providers have been trading abroad, on over-the-counter (OTC) markets, because their platforms are flexible and allow them to conclude contracts quickly. Ion Lungu, the president of the Romanian Association of Electricity Suppliers (AFEER), said: "The trades on the foreign platforms TFS and ICAP are done for the Romanian market, they do not represent imports or export transactions. Suppliers use foreign platforms to conclude these transactions quickly. The environment is totally anonymous. The identity of the partners is revealed after the trades are concluded".

He said that the electricity providers would like such a platform to be implemented on the markets managed by the OPCOM, the operator of the Romanian energy market: "In order to be able to make this kind of deals in Romania we need to have the ANRE approve the standardized contracts. The market than can be made more flexible is the Market for Bilateral Contracts with Continuous Negotiation (PCCB-NC). We have proposed that the OPCOM open it daily, to allow energy suppliers to trade with each other. Furthermore, quicker and more flexible procedures for trading should be approved".

The OTC platforms from aboard have standard products and offer very flexible terms for posting or withdrawing offers. Those trades don"t require guarantees; instead they are made based on a credit limit.

When asked what was preventing the creation of such an OTC market, the chairman of the AFEER said: "The standard contracts for the trading on the OPCOM markets have been stuck at the ANRE (ed. note: the Romanian energy market regulator) for more than a year. If the ANRE and the OPCOM got their act together, the regulations of the PCCB-NC market could be amended very quickly".

Ion Lungu claims that the standardization of the products and of the contracts on the OPCOM market will bring more liquidity on the Romanian energy exchange, which lacks long term contracts due to the crisis. The only market for which the crisis was hugely beneficial was the day-ahead market - PZU - because many suppliers preferred to bear the risk of daily price fluctuations instead of entering long term contracts. Moreover, the suppliers have accused producers that they are asking for prices which are too high compared to the current levels of demand.

The foreign OTC markets take into account the price on the Romanian spot market, Mr. Lungu said. The withdrawal and the modifications of the offers take into account what"s happening with the PZU.