futures

About the market

The Moscow Energy Exchange is the first exchange in Russia to trade power derivatives. When planning their power production and consumption, participants of Russia’s wholesale electric power and capacity market (WEPCM) will forecast and assess power price movements and employ strategies to fix a forward price and minimise their exposure to risk.

The goal of the Moscow Energy Exchange is to provide the WEPCM participants with a trusted marketplace and the tools, such as future contracts, to hedge against power price risk.

Practical application
The new liberalised power market has brought about price volatility increasing opportunity but also it has increased financial uncertainty. Our presentation outlines the factors influencing price fluctuations and the risks that market participants’ face, including the practical application of futures hedging, accounting, taxation (inclusive of VAT treatment of the futures’ transactions).

Products
Types of products – financial futures
Duration – monthly contracts
Underlying – the index of the average power price in a Hub
An outline of the trading process can be found in our presentation.

Trading sessions
10.00—14.00 Trading session
14.00—14.03 Intermediary clearing session (daily clearing)
14.03—18.45 Trading session
18.45—19.00 Evening clearing session
19.00—23.50 Trading session. Evening trading session (next business day)

Deal execution guarantee mechanism
Closed Joint Stock Company NCC Clearing Bank is the provider of centralised clearance and settlement services to the Moscow Energy Exchange futures section participants. It acts as a guarantor for the futures contracts and as the leading counterparty to all deals executed on the Moscow Energy Exchange.

Advantages of the futures trading

• Hedging against adverse power price movements,
• Ease of access to marketplace and swift deal execution,
• Stabilises financial planning for participants with physical power exposure,
• Guaranteed transactions,
• Low margin call,
• Low transaction costs,
• High-yield (speculative) trading opportunity,
• Possibility of arbitrage between different segments of electric power market,
• Late hour trading session (until 23:50 Moscow time).