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UK Financial Futures solution for secure and promote obligated parties

UK Financial Futures solution for secure and promote obligated parties. Secure and Promote solution next step for remodeling of UK Power Market N2EX Auction now firmly established as UK Benchmark Volumes to reach 140 TWh cleared on the Auction Daily volumes at 50% of UK Generation

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UK Financial Futures solution for secure and promote obligated parties

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  1. UK Financial Futures solution for secure and promote obligated parties

  2. Secure and Promote solution next step for remodeling of UK Power Market • N2EX Auction now firmly established as UK Benchmark • Volumes to reach 140 TWh cleared on the Auction • Daily volumes at 50% of UK Generation • Membership to reach 45 by year end • UK Futures successfully launched in 2011 • Volumes remain low with slow general uptake of Clearing in UK • Contracts have been traded by over 20 distinct counterparts • Gregorian Calendar, Cash settled versus Auction, automated give-up of Broker trades through Clearing Gateway, no requirement for BSC status or GTMA setup • Market Maker Supervision software immediately available – automated reporting NASDAQ OMX and N2EX milestones since 2010

  3. Daily Auction Volume since launch in Jan 2010 • Now touching 500GWh per day • True benchmark capturing upto 50% of Day Ahead Generation

  4. NASDAQ OMX - UK Futures Product Structure TickerCode: EUK Electricity UK Q3 01.07 – 30.09 Base: 5 week (168 h), 4 Month (e.g. 744 h), 5 Quarter (e.g. 2209 h), 5 Season (e.g. 4380 h) PEAK: 5 week (60 h), 4 Month (e.g. 264 h), 2 Quarter (e.g. 780 h) – Peak Seasons to be added during Q1 2014 Weeks W W W W W Note: Seasons are cascaded to quarters, and quarters to months. JAN FEB MAR APR MAY JUN OCT NOV DEC JUL AUG SEP Months Q4 01.10 - 31.12 Q1 01.01- 31.03 Q2 01.04- 30.06 Quarters • WS • 01.10 – 31.03 • SS • 01.04 – 30.09 Seasons Winter Season (WS) Summer Season (SS)

  5. UK futures current status and readiness for secure and promote • Existing Market Makers and MM contract structure in place for UK Power Futures • Tried and tested technology used extensively in Nordic Equity and Derivative Markets • Existing members to have immediate access to service • 20+ live participants, 300+ NOMX Commodities Members • GCMs have confirmed their ability to provide access to functionalityfor NCMs • Attractive fee solution in tandem with Secure and Promote introduction

  6. Market Maker Supervision – MMSSoftware solution for s&P

  7. NASDAQ OMX Market Making Software: MMS: Market Maker Supervision • NOMX’s Market Maker Supervision (MMS) software is a proven system – in use globally across multiple asset classes. • MMS is embedded within the trading system which allows for real-time feedback to MM’s in the event of failing obligations • MMS can support a range of obligation parameters including Fast Market rules (as a parallel obligation rule set). • MMS’s stated functionality in this document is already in use and deployable to NASDAQ’s UK Power offering

  8. Meeting the objectives of Secure and Promote:All obligations can be met by mms and the trading workstation

  9. B1 – Nominating a third party • NOMX can facilitate a third party MM to access the NOMX trading platform • We await interest from suitable providers • B2 – Platform • NOMX meets the requirements for a GB wholesale electricity market trading platform – 17 Licensed Suppliers with access + Over 300 Commodities Members • B3 – Products • All products already listed except Seasonal Peaks which will be live before Secure and Promote implementation Requirements in Detail:

  10. Nomx market maker supervisionapplication to ofgem’s S&P • B4 – Availability • MMS has the ability to monitor all parameters and can handle multiple parameters for each MM or subsets • MMS can support any time period of required obligation, both the % of time quoiting and the obligation window. • B5 – Bid offer spreads • NOMX can support both percentage and flat price spread solution • B6 – Obligation to trade • The NOMX trading platform requires that any ‘hit’ quotes are tradable. • B7 – Trade size • MMS can configure minimum trade size

  11. Nomx market maker supervisionalarms and reports • AUTOMATION - AIM TO SIMPLIFY THE REPORTING FUNCTION FOR ALL OBLIGATED PARTIES: • If MM Obligation is breached it is possible to configure MMS so that: • An alert is sent to the market maker • MMS produces Obligation fulfillment reports at end of day to verify performance of the S & P requirements: • Reporting can be automatically sent to the obliged Market Maker and/or Ofgemas required

  12. Next steps:Towards secure and Promote – March / April 2014 • NASDAQ OMX to meet with all obligated parties during Dec and Jan • Set out the technical delivery and describe access process • Offer Annual Market Making contract with associated fee rebate • Aim to sign up interested parties during Q1 2014 and announce roster of MMs to NOMX membership before S&P Go Live

  13. THANK you

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