EFETnet – Well Connected

Electronic Confirmation Matchingfor European Energy Traders

EFETnet – Well Connected

- 2 -2006 Presentation of EFETnet

The ad-hoc Response to Absense of Standards:


How does Energy Trading work?

Deal negotiated by phone or arranged by broker

1

Trader Trader

Broker

ETRM System(Electronic Trade &Risk Management)


2 Deal data is transfered to ETRM Systems

Back-office StaffChecks & approves3

4 Classic solution: Trade Confirmations are exchanged by fax

5Faxed data is matched against ETRM data

Manual work, media breaks, typos, high risk COST


How does Energy Trading work with the EFET Box?

Deal negotiated by phone or arranged by broker

1

Trader Trader

Broker



2 Deal data is transfered to ETRM Systems

Back-office StaffChecks & approves3

EFET Box EFET BoxebMS 2.0 ebMS 2.0

XML XML

New solution: Standardised exchange of XML documents using ebXML


The EFETnet Mantra: „Yin-Yang-Yong“


standardised

The achievement of EFET eCM: Total Interoperability

„Spaghetti Communication“- No Standard Business Process- No Standard for Data Exchnage- No Standard for Document Formats- # Converters ~ # Participants2

“Yin/Yang/Yong”:- Document Standard- Interoperable Software- No “Spaghetti” situation- # Converters = # Participants

Standardisation


EFETnet eCM Users & expected Users (Nov. 2006)22 companies live or with projects started The next Wave

UBS, EWE, MVV, CNR, ICP, Delta, WinGas, GazProm,Iberdrola, Man Financial, …

>= 35 live end of 07


Example of an EFETnet confirmation

Extremely fast

Electronic confirmations

sent and matched within 2

minutes

Typical

Electronic confirmations

sent and matched within

one day


Counterparty and Broker MatchExample 5: Trader, Counterparty and Broker involved in eCM, Broker‘s BCN matched with own CNF and BFI, and Counterparty‘s CNF matched with own CNF. Broker Match took place at first


Benefits of eCM

Management• Automate overhead to business• Standardise non competitive activities• Share costs

Legal• Increased clarity of business interactions• Standardised industry terms and templates• Speed of processing new commercial relationships

Business • Reduced operational risk• Scalability & straight through processing (STP)• Process standardisation and quality

Technical• Increased time and budget to deal with ‘higher value’ internal IT• Certified industry standard solution can be leveraged for other messages• Defined service levels


papiNet Users – A typical 3-Corner Relationship

Customer

Purchase

Order

Order Confirm

ation

Invo

ice

Inventory Stock

Delivery Notes

Reservation / Order

Transport

Call-off

Paper Supplier

Printer

Stock Management

Procurement Financial Acct.

Stock Management

Production Management

Stock ManagementSales Financial Acct.


Ponton X/P UsersPonton Consulting

Europe Europe Europe North America American Media, Inc. Brown Printing Corrugated Supplies Corp. Diamond State Port Corp. Graphic Communications Gruner + Jahr USA Hachette Filipacchi USA International Paper Judge Org Lands End PENN Group Quad Graphics Quebecor World R. R. Donnelley Schmidt.Com Stora Enso North America Stanton Grove Tembec Time Warner Others

A&B AG Agemasa Ahlstrom Arma Auraprint Axel Springer Verlag Barclays Capital Berberich Billerud Bopack Belgium Bopack France Burda Burgo Centrica Comunicate, Oslo Convoys Ltd. Cvörnjek Transportation Deutsche Bank Deutsche Papier EDF Trading Electrabel EMAP France EnBW ENECO ENEL E.ON UK Eshuis Essent Euro Papier Euro Rail Field Newcaslte

Gaselys Gaz de France Herma Holmen Paper Illwerke ILTE S.P.A. Inconso ISA Consultants Jenkins Shipping John J . Russell KELAG Leifheit Liberty Portugal LysLine Malmenayde Meyer’s Sohn Merrill Lynch Motorpresse Stuttgart M-Real Myllykoski Nextier News International Nordic Terminals, Ltd. Norrköpings Tidningar Norske Skog Norsk Hydro Otto Versand Paperman Paragon ID France Paragon Labels Perez Torres & Cia

PKF Pohl Logistics Polestar Group Raflatac Railog Torino Ravensburger Römer Etiketten Roto Smeets RWE Trading RWE Transportnetz Strom Sappi SCA Schlott Sebaldus Sempra Trading Södra Soporcel Spectron Group PLC St. Ives Printing Stadtwerke Düsseldorf Starlfors Sweden Starlfors Swizerland Steinbeiss Packaging Stora Enso Stukwerkers Havenbedrief Techniker Krankenkasse TIWAG Total UPM Kymmene Vattenfall Europe VKW Willmy Xerox

Spicers Paper (New Zealand)


?@

#$

Any Questions?


Ponton ConsultingGmbH

EFETnet BV

Participant A Participant B Participant C

Software Developer Provides an industry wide licence Maintenance, Support & Help Desk

EFETnet Agreement Monthly service fee Back to back maintenance,

support & help desk Sub-licence

EFET Electronic Confirmation Agreement (ECA): bilateral agreement to exchange confirmations based on EFET Standards

Contractual framework - overview Status of EFETnet


What is EFETnet ?

Independent company, owned 100% by EFET.

Aim is to provide the central infrastructure needed to enable its members to reliably and securely exchange documents within the European energy trading industry.

Peer-to-peer document-centric approach based on industry standards like EFET ECM 3.1 and ebXML.

In March 2006, EFETnet has 12 corporate customers

Initial focus on confirmation process with plans to move to scheduling, invoicing and CO2 title transfers in the future.

www.efetnet.org


Further Steps in Standardisation & Implementation

Next Steps:• Commodities • Spanish Swaps• Electronic Position Matching• Nominations• EUA Registry related

process• Settlement / Clearing


Expansion into neighbouring industry sectors

Traders & Brokers• Brokers: Spectron is life for 10 months, ICAP/GFI/Prebon to implement• Electronic Position Matching: Prototype bult by Dec. 06, product by July 07

CO2 Regsitries: Messaging integration developed together with CDC/DEFRA• Processes: Registry transfer requests, Registry reports• Won against SWIFT!

ETSO: Exchange of Power schedule data between European Grid Operators• ESS 3.0• Nominations

EASEE-gas: Data exchange among gas grid operators (planned)• EDIg@s, AS/2• Nominations

Exchanges: Deutsche Börse/ENDEX/Powernext• Central Matching, Clearing

Status of EFETnet


For Example: EUA Registry Interface

History• Mid 2004 – an ‚API‘ was requested• Oct 05 – evaluation conducted: EFETnet, Swift, bespoke build• May 06 – questionnaire – to be completed by YOU!!!• June 06 – decision expected ?

Carbon Expo (May 2006)• A lot of interest in EFETnet for carbon• CDC keen on EFETnet GRETA/DEFRA still need lobbying

Status (Nov. 2006)• Demand identified for 6-10 national Registries• CDC implementing, integrating with Ponton X/P• DEFRA has issues CFT für Registry/messaging interface• Trading System vendors start developing interface for EUA

transfer notification• Integration with pilot users (Gaselys, Electrabel) to start inDec.

´06

Status of EFETnet


Ponton Consulting takes different roles in international B2B integration projects.

SupplierCustomer

M MXMLXMLXML

ERP-System ERP-SystemTransformation /Data Mapping

Message Transfer

Internal ProcessesExternal ProcessesInternal Processes

Transformation /Data Mapping

BusinessConsulting

IT Consulting

Standardisation

BusinessConsulting

Solutions DevelopmentBack-end Integration

B2B IntegrationStandards


Trading OrganisationTrading Organisation

Borderline of the EFET Box system

Internet

EFET Box

EFET Box

ETRMSystem

Match/DispatchIn Out

ETRMSystem

InOut

Audit TrailCNFs

Archive

Audit TrailCNFs

Archive

EFET Box+ architecture and development

Match/Dispatch

Trading Organisation




.

.

.

.

.

.

.

.

.

.

.

.

Same Communication Infrastructure


?@

#$

Documents

EFETnet – Well Connected