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EFET report shows eSM improves OTC liquidity and reduces credit risk

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Today, EFET has launched a report of remarkable significance to the OTC gas and power markets. The study was conducted by PwC and together with 6 European energy companies investigates the impact of earlier settlement dates. 

Key findings are:

  1. A change to earlier settlement improves market participants’ and thus market liquidity significantly.
  2. The benefits are greatest for companies moving to daily settlement (delivery +2 days). Net sellers see most significant financial benefits, however all participants see benefits.
  3. An earlier settlement eases access for all companies to the OTC market.
    • Reduced credit risk exposure due to earlier payments.
    • Cash-flow benefit from earlier repayment of outstanding margin.
    • Increased counterparty credit headroom, facilitating increased trading activity.
  4. The EFET standard for electronic Settlement Matching (eSM) is already available and in productive use. Earlier settlements complement eSM. 

Our solution:

Move to eSM on Fidectus´ Global Energy Network today and unlock the value tied up in your OTC trading operations. Our SaaS is the only available solution that enables you to benefit of earlier settlements with or without your counterparties moving into the same direction. Get in touch with us to schedule a demo.

Access the report here.

 

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