The Operator of the Romanian Electricity and Gas Markets OPCOM and the Bucharest Stock Exchange – BVB plan to collaborate on eliminating the counterparty risk in the capital and energy markets and launching futures contracts having the energy market indices as underlying assets.
This project has already received official support from the Financial Supervisory Authority (ASF), the National Regulatory Authority for Energy (ANRE) and the National Bank of Romania (BNR), while the business plan of the project and the concept of the new institution is to be analyzed in the Extraordinary General Meeting of Shareholders of BVB from 29th-30th of January.
BVB and OPCOM propose that, in addition to the transactions carried out on BVB markets for shares, bonds, financial derivatives, the CCP project should provide clearing services for transactions in the energy market from the beginning, said Adrian Tanase, CEO of BVB.
In turn, Victor Ionescu, General Manager of OPCOM, considers the project of the local Clearing Counterparty proposed by BVB is able to provide a solution to correctly, quickly and safely cope with the counterparty risk.
The collaboration with BVB offers the benefit of eliminating the currency risk and any additional costs of collateral evaluation for energy market participants compared to clearing services provided by central counterparties from other EU countries, Victor Ionescu also said.
In substantiation of the business decision, the projections for the first ten years of CCP main that support its activity – the spot (cash) market, the derivatives market, financial revenues, membership activity (reflecting tariffs related to the clearing member status) – indicate a feasible project, considering a number of conservative premises regarding the increase in the trading activity in the capital and energy markets.
The initial investment in the new company would be about 16 million lei. The BSE will contribute 10 million lei, and will attract the rest from the market. In Victor Ionescu’s opinion, it would be appropriate for OPCOM to contribute 20% to the initial capital of the new joint stock company, which would be active at the earliest by the middle of 2020.