NECC’s business supports the US physical power and gas markets by integrating the physical and financial markets through market-neutral clearing services. It develops and provides clearing services to North American energy markets.
The NECC’s key customers include physical traders such as utilities and merchant generators, and financial traders such as banks and hedge funds. Operating as a market-neutral ‘riskless principal’, the clearinghouse enters matching positions with different counterparties and manages the credit risk on both sides using standard clearinghouse type margining.
Nasdaq OMX is an operator in the energy and commodities space through its Nord Pool market, a derivatives exchange which has been in operation for 15 years. The exchange recently launched N2EX, its marketplace for physical UK power contracts.
The Nasdaq OMX commodities clearing operation will be led by Geir Reigstad, head of Nasdaq OMX Commodities. Additionally, Nasdaq OMX plans to offer central clearing in its UK power derivatives market in 2010.
Bob Greifeld, CEO of Nasdaq OMX group, said: “Nasdaq OMX continues to expand its presence in OTC commodities and clearing, and this acquisition presents us with an opportunity to deliver what the US power and gas market currently lacks: a clearinghouse with the flexibility to clear both financial and physical instruments. The US power and natural gas market is another area where we can strategically apply our exchange technology and an innovative clearing solution to reduce risk, increase volume, and better serve the customer through improved services and lower cost.”
George Sladoje, former chairman and CEO of NECC, said: “The support and resources of Nasdaq OMX will enable our team to expand our offering over the entire continental US and provide the clearing facility that the industry has been seeking.”
