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Clearing

The Clearinghouse enters into financial power contracts and carbon contracts as a contractual counterparty. The Clearinghouse assumes liability for covering the future settlement of these contracts, thereby reducing the risk for both buyer and seller. Nasdaq Commodities provides clearing for standardised contracts traded on the exchange and in the over-the-counter (OTC) market.

About the Clearinghouse

  • Clearing capital: SEK 2,250 million (EUR 250 million)
  • Members: >350
  • Cleared power volume 2011: 1,746.6 TWh
  • Total value in cleared power volume 2011: EUR 73.4 billion
  • Cleared carbon volume 2011: 61 569 000 tonnes
  • Total value in cleared carbon volume 2011: EUR 0.70 billion

 

The clearinghouse provides clearing of all the contracts traded on the Nordic power exchange, as well as standardised contracts reported for clearing from the over-the-counter (OTC) market.

The clearinghouse acts as a contractual counterparty to all financial power contracts and carbon contracts (EUA sand CERs). As such, the clearinghouse assumes all liabilities for covering the future financial settlement of all cleared contracts, thus reducing risk for the market participants.

The clearinghouse offers the netting of positions, enabling members to utilise their capital in the most efficient manner. These net positions are the foundation for calculating settlement and daily margin calls. Market participants wishing to clear its contracts through the clearinghouse must provide collateral covering their daily margin call, in addition to the base collateral to be placed when signing the membership agreement.

Clearing calculates a margin requirement (collateral call) on a daily basis in order to cover its counterparty risk vis-à-vis the members. Acceptable collateral to the clearinghouse includes cash on a Nasdaq bank account, eligible securities and/or an on-demand guarantee according to a standard template. In the case of a default by a member, losses are initially covered by the collateral posted by the specific member. Any losses exceeding the collateral have to be covered by a combination of the clearinghouse’s equity, mutual fund (Default Fund) and default insurance policy

The clearinghouse uses the SPAN® margin call calculation system to calculate the size of the daily margin call for each member's portfolio. The daily settlement is automatic and members are connected to the settlement system through a variety of multinational settlement banks.

The clearing capital is SEK 2,250 million (EUR 250 million), consisting of the clearinghouse’s equity of SEK 720 million (EUR 73 million), and default insurance of SEK 1,550 million (EUR 157 million) provided by OMX Capital Insurance AG.

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