September 28, 2018 / 3:15 PM / 20 days ago

Clearing fees to rise on Nasdaq's Nordic power market, bank sources say

OSLO, Sept 28 (Reuters) - Two banks will raise the fees they charge power traders for clearing transactions on Nasdaq's Nordic power exchange after a trader's default this month, sources at the banks said, while other banks may follow.

Derivatives trader Einar Aas racked up losses he could not cover on Sept. 10, leaving a 114 million euro ($132 million) hole in Nasdaq's clearing house buffers. This forced members of the power market's clearing operation to help fill the gap, including banks which process trades for customers.

"The default brought a new situation. It is natural the costs for the clients will have to be adjusted," said one of the sources, who is the head of clearing operations at a European bank.

"Our cost has to be covered and fees will rise depending on each customer's individual risk."

This source said the bank would raise fees for customers within days or weeks.

A senior executive at the second bank said the bank would also soon raise fees to a "small extent" for its customers following the default.

Both sources spoke on condition of anonymity.

Swedish bank SEB and Dutch bank ABN AMRO said they were considering raising their fees.

"We will have a discussion with the members clearing through us and Nasdaq. One possible outcome after assessing the risk could be raising the cost of clearing fees," said SEB spokesman Frank Hojem.

SEB will take into account risks of credit losses as well as regular running costs in pricing its clearing services, Hojem said.

"We are considering our options. There are several options on the table. We will communicate our decision when we are ready," ABN AMRO spokesman Arien Bikker said.

Sparebank 1 SMN and Danske Bank said they did not plan to raise fees.

Citigroup, Morgan Stanley, Goldman Sachs and Societe Generale declined to comment.

Some power traders, who usually pay clearing fees themselves, said they would now consider using banks to help protect against risk.

Emma Mazhari, head of forward optimisation at Germany energy firm Ε.ΟΝ said: "We (already) clear through a bank, we were not directly impacted on that (the default) but you can anticipate that there will be indirect consequences for us further down the line."

She said an increase in banks' clearing fees was not surprising. "Obviously we would have to look at that."

Increased bank fees could trigger chain reactions and change the market, said Tor Mosegaard, head of power markets for Danske Commodities, which has already started to reduce its position on the Nordic power exchange.

"If our bank raised fees substantially we will consider closing our links to that bank ... I will negotiate with other banks," Mosegaar, who did not identify the bank, said. ($1 = 0.8639 euros) (Reporting by Lefteris Karagiannopoulos. Editing by Jane Merriman)

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