Electricity Futures Fast Facts

Evolution of Electricity Futures Market in Singapore

©2016 All rights reserved. William Prajogo Any reproduction, distribution, 21 January 2016 retransmission, display or other use of this material or the contents thereof without the written permission of the author is strictly prohibited. Singapore Exchange

Agenda  Electricity Futures Fast Facts

©2016 All rights reserved. Any reproduction, distribution, Benefits of Electricity Futures retransmission, display or other Product Information use of this material or the contents What’s Next thereof without the written permission of the author is strictly prohibited.

 Key Electricity Futures Milestones 

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Electricity Futures Fast Facts (as of Dec 2015)

• • • • • •

Exchange 1,025 S$97.8mil ©2016 All rights Cash reserved. Traded & GWh notional Settled Any reproduction, distribution, Cleared Traded value retransmission, display or other use of this material or the contents Asia’s first Electricity Futures market thereof without permission Good initial liquidity (comparable the with thewritten initial liquidity seen in successful and much larger markets such as Australia) the author is strictly prohibited. 6of market makers since July 2015 Increasing participation by non-market makers Open positions seen for the full curve (up to 2017 delivery) First NLT trades in EF done on 28 Jul for 25 lots 2

Electricity Futures Statistics (as of Dec 2015) Volume and Open Interest (OI)

Daily Settlement Prices (DSP)

©2016 All rights reserved. Any reproduction, distribution, retransmission, display or other use of thisOI Mix material orMix the contents by Contract OI by Participant thereof without the written permission of the author is strictly prohibited.

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Key Milestones in Electricity Futures (EF) Development

©2016 All rights reserved. Any reproduction, distribution, retransmission, display or other use of this material or the contents thereof without the written permission of the author is strictly prohibited. EMA’s Request for Interest on the FSC to facilitate the development of an EF market in Singapore

SGX hosted EF mock trading platform for potential market makers to try out their MM skills

Start of Market Making and Safety-Net Phase

More market makers on board; Start of Steady State Phase

May 2013

Apr 2014

Apr 2015

Jul 2015

Oct 2012

Aug 2013

Oct 2014

Jun 2015

Singapore gov announced the need for an EF market to foster competition in electricity market

FSC Allocation Agreement issued by EMA; SGX selected as the Exchange of industry choice to list EF contracts

Technical launch of the EF market (EF contracts listed for live trading)

More market makers on board; First EF trades on 2 Jun

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Benefits of Electricity Futures Market

©2016 All rights reserved. Any reproduction, distribution, retransmission, display or other More product Large choice Consumers use of this material or the contents thereof without the written permission More retail New of the author is strictly prohibited.competition Retailers Gencos

Provide additional hedging tool to manage their commercial and operational risks such as their plant outages.

Better risk management

Provide more product choice to lock in long term prices. Currently, large consumers buy electricity from the retailers based on either fixed price or indexations.

Lower barrier to entry for the electricity market by providing new independent retailers (without own generation assets) the option to use EF to secure fixed price contracts for their consumers.

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Electricity Futures are a cost-efficient way of fixing electricity prices +• +• +• +• +•

+•

©2016 All rights reserved. Cleared, no counterparty creditdistribution, risk Any therefore reproduction, Standardized size and unit retransmission, display or other use of thisandmaterial Relatively low spread transaction cost or the contents thereof the written permission Low capital outlaywithout for better cash management of accessibility the author strictly prohibited. Easy via clearing is members Exchange-traded and well supervised

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Contract Specifications Product

SGX Electricity Futures

Contract

SGX USEP* Quarterly Base Load Electricity Futures

Contract Period

9 consecutive contract quarters (Mar, Jun, Sep, Dec) starting with the current contract quarter

Contract Size

0.5 MW over each half an hour per day over the contract length 90-day Qtr: 1080 MWh 91-day Qtr: 1092 MWh 92-day Qtr: 1104 MWh

Price Quotation

S$ per MWh

Tick size

S$0.01 per MWh

Trading Hours

2.00pm – 5.00pm, during Singapore business day

Last Trading Day (LTD)

Last business day of the contract quarter

Final Settlement Price

Arithmetic average of all USEP half - hourly prices over the expiring contract quarter, rounded to two (2) decimal places.

Daily Price Limit

No price limit

Position Limit

1000 lots net long or net short in any or all contract quarters combined

Settlement Method

Cash Settlement

Final Settlement Day

LTD + 5 business day

Negotiated Large Trade (NLT)

Minimum 10 lots

Bloomberg / Reuters Ticker

Bloomberg: SGEA Comdty DES Reuters: 0#SEF

©2016 All rights reserved. Any reproduction, distribution, retransmission, display or other use of this material or the contents thereof without the written permission of the author is strictly prohibited.

*Uniform Singapore Energy Price – the spot electricity price as published by the Energy Market Company Pte Ltd

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Other Information Margins

©2016 All rights reserved. Any reproduction, distribution, retransmission, display or other use of this material or the contents thereof without the written permission Market Making Transaction Fee of the author is strictly prohibited.  Diverse set of MMs: 6 MMs in total  Clearing Fee:  

Inter-month Margin Offset: up to 60% Inter-commodity Margin Offset: 40% with fuel oil products

– S$50 per lot

 Market Making Period: 4.30pm – 5.00pm  Effective Spread: $5-$7/MWh

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Monitoring EF prices/trades Bloomberg (Code: SGEA Comdty)

SGX Website (www.sgx.com)

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What’s Next – Building SGX Energy Complex

©2016 All rights reserved. Any reproduction, distribution, retransmission, display or other ELECTRICITY OIL GAS use of this material or the contents thereof without the written permission of the author SGX is Core strictly prohibited. Energy Offerings - Quarterly Base Load Futures

- HSFO180 Swaps/Futures

- SLInG LNG Swaps/Futures

Next electricity products:

- Dated Brent Swaps/Futures

- Monthly Base Load Futures

- Crude/Refined/Fuel Oil

- Other electricity products

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SGX LNG Derivatives (Launching on 25 Jan) Contract Contract Size Ticker

SGX FOB Singapore SLInG LNG Swap

SGX FOB Singapore SLInG LNG Futures

10,000 mmBtu

1,000 mmBtu

©2016 All rights reserved. Any reproduction, distribution, Need for trusted spot LNG index and a reasonably liquid LNG derivative market retransmission, display or other use of this material or the contents SGX FOB Singapore FOB Singapore SGX thereof without the written permission SLInG LNG Swap / LNG Index Group Futures (“SLInG”) of the author is strictly prohibited. LN

Min Price Fluctuation Contract Months Final Settlement Position Limits

LNF

USD0.001 / mmBtu

12 consecutive months starting from the forward month

Cash settlement using arithmetic average of FOB Singapore SLInG Index weekly spot assessments for the expiring contract month, rounded to three decimal places

2,000 regular-sized full month swaps contracts on the same side of the Market and in all Contract Months combined.

Price Limits

NA

None

NLT Volume

NA

10 lots

T : 8.00am – 8:00pm T+1 : 8:00.01pm - 4.00am LTD : 8.00am – 8.00pm

T : 8.00am – 8:00pm T+1 : 9:00pm - 2.00am LTD : 8.00am – 8.00pm

Trading Hours (SG Time)

Towards spot/short term trading : • New supplies from Australia and US • Softer demand in Japan, China • Entrance of new physical players

Last Trading Day (LTD) Clearing Fee

Last publication day of the FOB Singapore SLInG Index for the relevant Contract Month USD10/lot

USD1/lot

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Weekly assessment Balanced portfolio of 20 major spot players No editorial intervention IOSCO principle

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Transparent pricing Ease of access Reliable regulatory framework

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Contact If you require more information on SGX Electricity Futures, please contact:


Products William Prajogo – Electricity +65 6236 8743 [email protected]

Sales Patrick Yeo – Sales & Clients +65 6236 5371 [email protected]

Or visit our website:

www.sgx.com/commodities/electricity

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Thank you


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