Secondary Market - Trading Processes and Procedures

General Trading Process

1. A shipper party creates a Trade Proposal;

2. The platform validates and publishes the proposal -- optionally, the operator must validate the proposal too;

3. One or more Shipper(s) Counterparties place a Response to the Trade Proposal;

4. Responses are subject to an acceptance procedure (either manually by the Initiating Shipper or automatically by the platform);

5. Once a Trade Proposal has been matched with a Response, a Trade is created;

6. The Trade is validated by the platform and the TSO;

7. The Trade confirmation is sent both to Shippers and to the TSO;

8. The Trade is published on the platform.

Secondary Trading Procedures

I. Definitions

II. Types of Trade Proposal

1. Proposal to sell capacity: A Shipper Party holds capacity that they want to sell on the secondary market. Shipper Counterparties can, in turn, place requests to buy capacity from the shipper who placed the trade proposal

2. Proposal to buy capacity:  A Shipper Part is looking to buy capacity on the secondary market. Shipper Counterparties can, in turn, offer capacity to the shipper who placed the trade proposal.

III. Types of Trade Transaction

Transfer of Use: Transfer of Use is a Transaction Type in which the selling shipper remains the legal counterparty of the TSO and the buying shipper nominates the purchased capacity.

Assignment: An Assignment is a Transaction Type in which all rights and obligations are completely allocated from a selling shipper to a buying shipper.

IV. Types of Trading Procedure

Trading Procedures

A Trading Procedure is the method whereby a trade proposal is matched with a trade response or responses. As such, there are three kinds on which we shall elaborate below:

1. First Come First Served (FCFS)

2. Call for Orders (CFO)

3. Over the Counter (OTC)

Basic Principles Applicable to All Procedures

1. Contract Duration - the contract period of each trade proposal can be defined individually by the shipper.

2. Capacity Categories - firm and interruptible capacity of all categories supported by the respective TSO can be traded on the secondary market.

3. Transaction Types - capacity assignment & transfer of use are supported by PRISMA; TSOs can configure which transaction types are allowed to be traded at the corresponding points.

4. Trading Times - secondary products can be traded 24/7 on the platform; lead time of the respective TSO must be considered when trade proposal expiry date is set by the shipper.

5. Anonymity - all non-OTC trading procedures are anonymous until the deal is concluded; only then the parties are revealed to each other. The counterparties may remain completely anonymous during the entire contract lifecycle if supported by the TSO (only possible for capacity assignments, with a price of € 0,00).

6. Prices - All prices (shipper to shipper) are entered in currency subunit (e.g. ct/kWh/h). Negative prices are allowed, i.e. the selling shipper could pay the buying shipper for taking over capacity.

NOTE: All prices stipulated by shippers consist in a positive or negative surcharge on the regulated tariff of the original contract. The regulated tariff must still be paid to the TSO.

7. Bundling - unbundled entry & exit products at the same point can be sold as a bundle if supported by the TSO.

8. Product Settings - the shipper placing the trade proposal can indicate whether it is allowed to buy/sell only a part of the offered/requested amount or period. Additionally, a minimum amount or period per trade can be set.

Over the Counter (OTC)

Definition:

• One of both Shippers creates Trade Proposal and states the counterparty.
• The shippers agree on a capacity trade in advance (bilaterally outside of the platform), registration, confirmation and validation are done on the PRISMA platform.
• Price and conditions of the trade are agreed upon by the parties in advance.
• Counterparty is notified as soon as the Trade Proposal has been submitted and validated.
• Counterparty can respond to the Trade Proposal, the Request/Offer is considered as the confirmation of the counterparty.

Rules that apply for OTC deals:

• The counterparty that accepts or rejects the deal cannot change the price
• The vendor can also send the OTC request to several parties

OTC Process Chart

First Come First Served (FCFS)

• The price of the proposal to buy or sell is considered as the fixed price the buyer/seller is willing to pay/sell for.
• Once the Request or Offer is submitted, it is automatically accepted
• FCFS proposals are anonymous until the deal has been confirmed

FCFS Process Chart

Call for Orders (CFO)

Definition:

• Price of the proposal to buy/sell is considered as max./min. the buyer/seller is willing to pay/sell for
• The party who created the Trade Proposal can wait for more Requests or Offers to come
• The party who created the Trade Proposal can select the Requests or Offers he accepts from all received Requests or Offers.
• CFO proposals are anonymous until the trade has been confirmed; this implies that the trade cannot be negotiated.

Rules that apply to Call for Orders:

• When placing a request, the buyer can set a maximum price he is willing to pay.
• When placing an offer, the vendor can set a minimum price he is willing to accept.
• Both the buyer and the vendor have to set the maximum amount of capacity that they request/offer.

CFO Process Chart

Articles on Additional Features of the Secondary Market:

Trader Lists: lists that can be used to restrict secondary trading to a defined number of counterparties. Trader lists help shippers to restrict trading in accordance with their company’s requirements (e.g. in terms of creditworthiness).

Trading Conditions: the conditions to be used during product creation. Trading conditions are set using either default settings provided by PRISMA, or by a shipper (secondary market) or TSO (primary market), which may elect to upload a file with their own conditions.