CME Group Announces the Launch of a Suite of European Natural Gas Contracts on CME Europe

CME Group Announces the Launch of a Suite of European Natural Gas Contracts on CME Europe

CME Group, the world’s leading and most diverse derivatives market place, announced today the launch of the first suite of physically and financially settled European natural gas cleared futures contracts. The contracts will be listed on CME Group’s European exchange, CME Europe for first trade date on 19 January, 2015 and are authorised and approved by the United Kingdom (UK) Financial Conduct Authority.

The new suite of physically and financially settled European natural gas contracts, are the first to be introduced on CME Europe since its launch in April with foreign exchange and biofuel contracts. There will be four physically delivered and eight financially settled exchange-traded natural gas futures on CME Europe. The physically delivered futures contracts are in the two major natural gas hubs in Europe: the UK National Balancing Point (NBP) and the Dutch Title Transfer Facility (TTF). The financially settled futures will be based on the ICIS Heren Natural Gas Indices for UK, Dutch, Austrian and German natural gas hubs. The natural gas contracts will be available on Clearport and Globex and distributed via the Trayport platform alongside other exchange products.

“While the European Gas landscape is shifting, these new cleared futures contracts will give our customers access to the enhanced risk management contracts they have asked us to provide in a volatile marketplace,” said Martin Fraenkel, Global Head of Energy, CME Group. “We are launching these contracts now to serve the risk management needs of the gas market participants who are showing an increased interest in using cleared futures alongside their traditional over-the-counter positions. A large percentage of trades in the European natural gas market are brokered and executed on a bilateral basis so these contracts have been designed with that in mind. They offer the market the opportunity to execute their trades bilaterally and submit them to the exchange and clearing house. This increases capital efficiencies because it means clients do not have to rely on bilateral credit lines.”

Natural gas is a key component in Europe’s energy supply chain and is widely used across a number of different industrial sectors. The method of delivery includes pipelines, liquefied natural gas vessels and regasification terminals. The latter two are likely to play an increasingly important role for in the market as more infrastructure is built to cope with expectations of rising supply. These contracts will be based on the most liquid of the underlying European Natural Gas markets.

CME Group offers cleared futures and options for the most extensive and liquid energy complex in the world including: a suite of natural gas led by our Henry Hub future that is recognised as the most widely traded benchmark for natural gas in the world; all three global crude oil benchmarks; refined products; biofuels; coal and electricity contracts.

These contracts will be subject to the rules of CME Europe and cleared via CME Clearing Europe, CME Group’s European clearing house.

Source: CME Group

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