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WHY DO WE NEED WELL FUNCTIONING
EXCHANGE AND BILATERAL MARKETS?
Piotr Wąsik
Financial Managing Director, Member of the Board
VATTENFALL ENERGY TRADING POLAND
„The Power of the Market” Congress
Warsaw, 8 October 2010
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Agenda
1. Proper market – how should it look like?
2. Costs and risks
3. Exchange and OTC markets shape in Poland
4. What are there still missing?
5. What are the benefits of a properly functioning market?
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Wholesale energy market
Exchange market
OTC market
• Organization and Standardization
• Transparency and Anonymity
• Access
• Reference price
• Market security • Bilateral nature
• Flexibility and matching
• Equal and market rules
• Delayed cash flows
• Brokers’ role
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Costs and risks on the exchange and OTC markets
EXCHANGE MARKET OTC MARKET
RISK
S
• Liquidity risk
• Exchange and clearing fees
• Financing costs
• Counterparty risk
• Credit risk management
• Brokerage feesCOST
S
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Share of PPX spot market in domestic consumption
0%
1%
2%
3%
4%
5%
6%
7%
8%20
09
01-2
010
02-2
010
03-2
010
04-2
010
05-2
010
06-2
010
07-2
010
08-2
010
09-2
010
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Wholesale energy market structure in 2007-2009
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2007 2008 2009
Brokers
POEE
PPX
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Wholesale energy market structure in 2007-2009
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2007 2008 2009
Other OTC
Brokers
POEE
PPX
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… and in 2010
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Q1 2010 Q2 2010 Q3 2010
Other OTC
Brokers
POEE
PPX
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What are the weak points of the wholesale energy market in Poland?
EXCHANGE MARKET OTC MARKET
Size and liquidity Master agreement standard
Tradable horizon Transparency and availability
Available products Risk management rules
Exchange obligation Trading techniques
>1 spot exchange? Role of brokers
Entry and operation barriers
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What are the benefits of the properly functioning wholesale energy market?
PROPER
WHOLESAL
E MARKET
PROPER
WHOLESAL
E MARKET
COMPETITIVENESS
RETAIL MARKET
DEREGULATION
REFERENCE PRICEPREPARATION FOR
MARKETS INTEGRATION
EFFECTIVE MARKET RISK
MANAGEMENT
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THANK YOU FOR YOUR ATTENTION
Piotr WąsikFinancial Managing Director, Member of the Board
VATTENFALL ENERGY TRADING Sp. z o.o.ul. Złota 5900-120 WarsawPoland
tel. +48 22 587 50 34e-mail: [email protected]/trading