EEX is refocusing its emissions trading efforts as its secondary market volumes were halved in the first six months of 2015, the Germany energy bourse’s chief operating officer said on Wednesday during a press briefing in London.
The drop in activity came despite the Leipzig-headquartered bourse nearly doubling its CO2 volumes in the second quarter compared to a year ago.
EEX handled a total 18.5 million EUAs on its secondary market in H1, including 14.2 million between April and June, it said on Wednesday. However, this was a far cry from the 36.1 million transacted in the first half of 2014.
EEX COO Steffen Koehler told reporters the bourse had at the start of the year temporarily turned its focus to developing its French and Italian power markets from building its CO2 business, which posted a €300,000 drop in revenues in 2014.
“CO2 is not off our radar … (but) EEX doesn’t have thousands of employees and this proved to be the right strategy,” he said, citing a near 500% increase in the bourse’s French and Italian power trading volumes in H1 2015.
EEX grew its market share in the French power derivatives market to 21% from 6% a year ago, and in the Italian market to 45% from 9%. It also raised its share in the German power derivatives market to 30% from 23%, while posting a 71% year-on-year increase in overall electricity trading volumes.
EEX hosted government auctions for 296.7 million spot EUAs in the first half of 2015, up 3% from H1 2014. This increase, however, was mainly due to fewer allowances being removed from sale under the EU’s Backloading programme.
The exchange currently hosts spot EUA auctions on behalf of 27 out of the 28 EU member states, with only the UK opting to hold its auctions on London-based ICE Futures Europe.
EEX has taken additional steps in the past few months to boost its emissions volumes and regain market share lost to ICE Futures Europe.
Koehler said two new market makers had been appointed including Czech utility CEZ, which is providing liquidity on the bourse’s spot EUA market.
EEX now has four CO2 market makers including CEZ, Axpo Trading, Belektron, and another company whose identity has not been revealed.
EEX earlier this year introduced an “initiator-aggressor” programme where trading and clearing fees are waived for the counterparty that initiates a transaction.
It also waived fees for only one leg of spot-futures time spreads, while offering a 50% rebate on trading and clearing costs for members who trade more than 5 million tonnes per month.
However, an EEX spokeswoman said none of its members had traded enough to meet that criteria yet.
Koehler said EEX is also looking to expand its emissions trading presence outside of Europe, with a prime focus on China and Kazakhstan – both home to burgeoning carbon markets.
EEX is working with various local stakeholders in those countries, including carbon exchanges that operate in the China’s pilot carbon markets such as the China Emissions Exchange (CEEX) in Shenzhen.
EEX’s Chinese collaborations are mainly limited to sharing information and expertise at the moment, but Koehler said the bourse is examining how to potentially expand that to the export of concepts and technology, for example its auctioning platform and other methodologies and processes.
By Mike Szabo – firstname.lastname@example.org