Central Counterparty Settlement

All products traded on the emsTradepoint Exchange Platform are settled by a Central Counterparty (CCP). The CCP is the buyer to the seller and the seller to the buyer, which guarantees end-to-end anonymity for all transactions and reduces counterparty credit and physical delivery risk.

emsTradepoint Limited is the emsTradepoint CCP.  emsTradepoint Limited’s obligations as CCP are guaranteed under a parent guarantee granted by Transpower New Zealand Limited.  Transpower New Zealand Limited has an AA- investment grade rating by Standard & Poor’s and an A1 rating by Moody’s. 

Settlement Process

Once a trade is formed, it is immediately transferred into two trade legs:

  • one for the buyer with emsTradepoint
  • one for the seller with emsTradepoint
> Physical Settlement

On the day of delivery, Participants either deliver to or take away from the relevant Hub. Performance on physical delivery obligations is managed under the existing Transmission Codes.

> Financial Settlement

emsTradepoint nets all trades delivered in the previous month into a single statement, issued monthly. Payment obligations are between emsTradepoint and each Participant separately.

 

trades

 

Benefits of CCP Settlement

CCP settlement has numerous trading, risk and operational benefits:

> End-to-End Anonymity

Traders value anonymity. The facilitation of full cycle anonymity through the CCP model means Participants only ever deal with one counterparty - emsTradepoint.

Anonymity is maintained at all times: from the time an order is placed, to a trade being formed, to financial settlement and beyond.

> Credit and Physical Risk Mitigation

Traders value a secure counterparty. With a CCP, Participants are unaffected by payment default by other buyers and sellers. Financial exposure across multiple counterparties and products is also reduced to the single counterparty credit risk of the CCP. This provides a distinct benefit over bilateral gas supply arrangements.

> Operational Savings

CCP Settlement reduces back office costs through the use of a single, standardised settlement process across all trades. Financial settlements are netted, resulting in one settlement per month.