EEX to integrate Baltic gas products by end of 2024

Germany-based exchange operator EEX plans to fully integrate regional gas exchange GET Baltic into its trading systems and rulebook "towards the end of next year", the firm told Argus.

EEX completed its acquisition of a 66pc share in GET Baltic earlier this month, and will become operator of the exchange.

Market participants frequently cite low liquidity as the main reason for the relatively narrow use of GET Baltic, with the majority of trade focussing on short-term products, as a lack of liquidity makes hedging exposure to longer-term contracts difficult. This pushes traders to use the more liquid Dutch TTF instead.

By full integrating of the Baltic market into the wider EEX infrastructure, "we ultimately open up the GET Baltic markets for a wider group of participants", the operator said. This integration "creates new potential for spread trading between the Finnish-Baltic markets and the liquid pan-European gas markets that are currently available at EEX", the firm said. EEX has 440 market participants admitted for trading on its platform at present.

That said, EEX for now has no plans to introduce any new products on the GET Baltic exchange.

A secondary issue affecting use of GET Baltic is the frequently high margin requirements for trading, which market participants say act as a barrier to entry and reduce the number of trades users can make by burdening cash flow.

Through integration with EEX, GET Baltic users will benefit from cross-margining effects through EEX's clearing house, which leads to "significantly reduced margin requirements", EEX said. Firms that concentrate their trading activity into clearing houses or exchanges can net positions taken across different markets and commodities to reduce their overall exposure.

By Brendan A'Hearn