Following extensive market consultation and coordination, the UK power market is taking the step to switch trading in wholesale UK power from the EFA calendar to the more widely used standard Gregorian calendar on Friday 1 November.
The current trading calendar for wholesale power in the UK – the EFA calendar – is unique and therefore places UK power markets at a disadvantage in attracting participants from outside of the UK who are used to the 'regular' Gregorian calendar. The FOA's Power Trading Forum has played a coordinating role in facilitating the migration from the EFA Calendar to the Gregorian Calendar for UK Physical Power trades, with Winter 14 the earliest delivery period to be traded as Gregorian products. This change is being made to align the UK Power market with European Power markets and the UK NBP Gas Market. The vast majority of active market participants have been involved in fortnightly industry conference calls where details of the migration plan have been agreed along with the date for the liquidity cutover.
Following an extensive project to ensure industry readiness, commitments to trading on the Gregorian calendar have been received from a significant number of market participants in UK power including the Big 6 power utilities and the FOA is confident that trading will migrate smoothly to the new trading calendar.
Chairman of the FOA Power Trading Committee, Stephen Harris, said: “We would like to thank all those who have been involved in taking this project forward, including the Power Trading Committee, the participants in the fortnightly conference calls, the vendors and the price reporting agencies.”
The FOA carried out an industry survey in December 2012 which showed an overwhelming support for making the switch to the Gregorian calendar in order to align the market with UK gas and European power markets. It is believed that this development will remove a barrier to entry for firms considering entering the market, which could help deliver increased market liquidity.
The FOA working group has held fortnightly calls throughout 2013 and arranged a number of Live Trading Windows prior to the liquidity cutover, to allow market participants to trade in Gregorian products and test their live systems to ensure a smooth transition of trading activity on 1 November. These have been held successfully between 11:00 and 12:00 every Wednesday since 25 September and over 40 live deals have been agreed between at least six different market participants.
Due to the misalignment of the EFA and Gregorian calendars, a series of ‘Gap’ products have been created and are listed within the Trayport system to allow market participants to flatten out forward positions where a combination of EFA and Gregorian seasonal trades are held. It is expected that there will be a reasonable level of interest in trading these products.