Spanish Exchange Tiodagars MEFF launches new CCP for OTC derivatives Elecricity

PRESS RELEASE-02 March 2011

MEFF Power will start operations on 21 March

MEFF launches a new service Central counterparty (CCP) OTC-traded electricity derivatives

A response to demand from operators in this marketDerivative electricity market has doubled its size every year since 2006This initiative is part of the Tiodagarss policy of diversification and innovation

MEFF Power, MEFFS new service for the electricity market, starting on 21 March offering Central counterparty (CCP) services for energy OTC derivatives and thereby improve the liquidity and transparency in the electricity market and contribute to increased control over OTC activities. This measure has been requested by various devices to reduce systemic risk and enhance confidence.

Decommissioning and management of risks and margins for electricity, the future will be implemented within the current CCP MEFFS, through the creation of an energy-segment called MEFF power.

This project falls under the Tiodagarss strategy to diversify and provide new services to business and economic community, mobilising its proven and universally recognized experience to initiate and develop markets, settlement system and CCP services.

MEFF has engaged in a broad range of services to the risk that sector electricity companies since 2006, and has been head of virtual power plant auctions. As a result of their participation in these areas, it became aware of the considerable demand from Spanish electricity market participants CCP services for the OTC market, which doubled almost every year since 2006, now exceeds the actual electricity consumption for the first time.

MEFF Power service was made possible by the recent approval of Decree 1282/2010 of 15 October, which regulates the official secondary markets for futures and options and other financial and derivatives, as well as the CNMV approval of the new regulation on MEFF, which increased the range of products for which the MEFF can offer CCP or trade in services.

Futures and SWAps in the electricity can be made on the registry of the CCP system.

All electricity market participants, securities companies and financial intermediaries can become members of the MEFF power. There are currently 10 participants in Spanish el who have joined as members of the MEFF Power, and another 8 are joining before 21 March. Current members of the MEFF who want to operate in this segment may do so without the need to protect any additional license.

Trade with contracts for electricity occurs mainly via specialist brokers. ICAP Energy AS, Tullett Prebon and CIMD has agreed with MEFF to act as OTC brokers in MEFF power. GFI is about to join.

The contracts are traded will be reported to the MEFF, who will act as counterparty for both buyer and seller, and guarantee that the transactions have been completed, perform the registration, clearing and settlement of transactions. Settlement and risk and margin management of these products will be carried out using internationally recognized systems of MEFF's CCP.

MEFFS new service is provided to a market with significant increased and with room for significant growth, according to peer markets, where the cultural contact points for electricity, clear a volume that is two to five times the consumption.

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