September 14, 2018 / 7:28 AM / 6 months ago

UPDATE 2-Fortum hit with $23 mln Nasdaq bill after Norwegian trader's default

* Power trader's bet on Nordic-German spreads failed

* Nasdaq contingency fund depleted by EUR 107 mln

* Fortum and other Nasdaq Commodities members must plug hole (Adds Fortum quotes, background, bullets)

By Lefteris Karagiannopoulos and Terje Solsvik

OSLO, Sept 14 (Reuters) - Finnish energy firm Fortum will pay approximately 20 million euros ($23 million) to help replenish a Nasdaq Commodities contingency fund after the default of a private Norwegian trader, the company said on Friday.

Einar Aas, a veteran derivatives trader who made large bets on the power market, left a 114 million euro hole in the fund that commodities companies who are part of the Nasdaq clearing house are obliged to cover.

"It's a big position and a big loss that clearly affected the default fund," Fortum investor relations manager Maans Holmberg told Reuters.

"It's important to look at processes. It is very important that Nasdaq carries this responsibility," he added.

Clearing houses like the one operated by Nasdaq are vital for the stability of markets, acting as an intermediary in stock, bond or derivatives transactions and ensuring completion if one side goes bust.

Aas failed to meet required payments called margin calls to Nasdaq to insure against losses on Tuesday.

On Thursday Nasdaq said the default had eaten up its own 7 million euro contingency fund and also two thirds or 107 million euros of a shared contingency fund that members of its commodity clearing operation are responsible for.

Nasdaq liquidated the trades then offered Aas' portfolio to several potential buyers on Wednesday. Fortum said it bid unsuccessfully.

Fortum and other members, which include Norwegian state-owned power giant Statkraft and oil and gas giant Equinor were told to pay their share into the contingency fund within two business days or risk being declared in default themselves.

Fortum said its original participation in the contingency fund was approximately 30 million euros so it will book approximately 20 million euros in its third quarter results as a financing cost.


The trader's bet backfired with unusually strong fluctuations in regional power market spreads, as heavy rain pushed down prices in the hydroelectric-dependant Nordic region, while a spike in the cost of carbon drove up German prices, Nasdaq said.

"My position was too big in relation to the market's liquidity," Aas said in a statement on Thursday, adding that he risks bankruptcy.

Aas, who keeps a low public profile, in 2016 had an estimated net worth of 2 billion Norwegian crowns ($244 million) according to business magazine Kapital.

Meanwhile, others Nasdaq members were being told how much they would have to pay.

Statkraft told Reuters it will pay 5 million euros to the fund at Nasdaq's request.

Norway's largest firm, Equinor, said it had also received a request to pay its share, but the amount was minimal.

($1 = 0.8548 euros)

$1 = 8.2109 Norwegian crowns Additional reporting by Ole Petter Skonnord; Editing by Mark Potter and Elaine Hardcastle

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