Bogdan Tudorache

Although the new instrument launched by the Romanian Commodities Exchange (BRM) does not cover all types of derivatives requested by a mature market with anonymous transactions, it covers some of the demand for market liquidity and the need to have a long-term reference price in the gas ring, says Septimiu Stoica, chairman of the GMS, BRM.

Since July, the gas exchange has launched the central counterparty service for one-week and one-month forward transactions and will include in compensation also longer maturities since September, with an additional clearing fund being set up by year-end.

“We hope it will ensure liquidity, it’s the moment of truth. It is the biggest challenge for a stock market when it launches a new market segment to have the necessary liquidity,” Stoica said. “For producers it should be perfect,” he added, answering an energynomics.ro question.

Investors are invited to sign new contracts for the new market segment in the next month – there are already two traders who have rallied to the system.

In fact, the new instruments launched come as an interim solution before signing a contract with a Western central counterpart (energynomics.ro sources say that from Austria, after the negotiations with Hungarians were abandoned), with which BRM has been in negotiations for some time. The new solutions offer semi-guaranteed BRM trades, which also provide the central counterpart – so that the collateral of a contract is covered by 15-20% of the value, as opposed to 100% previously – which also allows margin trading. In addition, the player may choose to withdraw from the contract before maturity.

The guarantee fund is fed by BRM with 1.5 million euros, which can cover any price variations (in case of need, it first enters the margin, then into the guarantee fund).

BRM has already had meetings with large players who have shown interest in such an instrument and it is hoped that 8-10 major market players will sign contracts for the new instruments in the next month. “This reduces the financial effort of the market participants (the guarantee shrinks from 100% to 15-20%) and forward contracts are equivalent to futures contracts,” says Gabriel Purice, president and general manager of BRM.

If OPCOM will manage to get out of Transelectrica and provide professional clearing services also BRM will be rallying it, but it is hard to believe that OPCOM will be privatized within a short time horizon, Purice also told energynomics.ro.