EEX to launch cash-settled gas futures on European index

FRANKFURT, Nov 12 (Reuters) - The European Energy Exchange (EEX) plans to launch cash-settled gas futures on its European Gas Spot Index (EGSI) as well as associated spark spreads - power generation margins for gas burning - in the first quarter of 2021, it said on Thursday.

The new futures products will be listed in the Dutch, Austrian and German market zones, covering short-term deliveries for days, weekends and weeks, and stretching to longer-term maturities for months, quarters, seasons and calendar years, it said in a statement.

“The launch of these cash-settled contracts will enable easier access to the European gas markets for financial firms who do not require physical delivery (of gas) while at the same time allowing all parties to trade at the EGSI index price for hedging purposes,” it said.

The EEX, part of Deutsche Boerse, is the most liquid spot gas trading bourse in Europe, alongside wider over-the-counter (OTC) markets.

The EGSI calculates all trades during one day, making it a suitable reference for financially settled futures, said chief strategy officer Tobias Paulun.

The introduction of cash-settled gas futures will also enable EEX members to trade the price difference between gas and power futures, simplifying hedging of gas fired power plants and creating a bridge between the two derivatives markets, said chief operating officer Steffen Koehler. (Reporting by Vera Eckert, editing by Mark Potter)