Financial electricity trading

The Nasdaq OMX Commodities market organises a futures market (financial trading) for long-term electricity trading. This allows the players to guard themselves against the varying spot price and manage the risk for the electricity that they buy and sell for future supply. This, in turn, enables other players to act who are more interested in purely financial trading, e.g. banks and traders. The market supplies standardised financial contracts (futures) for delivery further down the line. These contracts contain a certain volume of electricity for a certain period at a certain price. The spot market's system price constitutes the reference price for the financial trading. Financial futures trading can take place for a time period of up to four years and trading can be done on 24-hour, weekly, block, seasonal or annual contracts. The market also offers clearing activities aimed at reducing the financial counterparty risk for those who have bought the contracts.