SYDNEY--(BUSINESS WIRE)--FEX Global, which operates a licensed Australian Futures Exchange this week successfully launched its $500 Strike 5MS Cap Power Quarterly Futures and Options contracts. The contract adds to the existing FEX Global energy futures offering and has been listed in response to persistent higher prices and increased volatility in Australian wholesale power markets. It is anticipated that the new contract will give energy market participants an additional targeted risk management tool in addition to providing risk margin efficiencies.
The exchange has now announced its plans for Large-Scale Generation Certificate (LGC) Futures and Options Contracts.
The LGC program was created by the Australian Government as part of its Renewable Energy Target (RET), a scheme designed to reduce greenhouse gas emissions in the electricity sector and encourage the generation of power from sustainable and renewable resources.
Thomas Price, Director of FEX Global commented: “Fair and orderly environmental financial product markets are critical to the development of this significant asset class. Financial markets accelerate investment, widen participation and give price and risk signals for investment allocation and therefore act as economic activity multipliers.”
Price continued, “Australia is undergoing a profound and accelerating pace of change in new energy sources. The environmental asset class deserve, at a minimum, the same level of market integrity and product availability that is mandated for traditional energy and commodity markets.”
Les Hosking, FEX Global Group executive Market Structure and former Sydney Futures Exchange CEO commented: “Licensed and supervised derivative markets introduce additional elements important for the operation of fair and orderly markets. Price transparency, market integrity rules, compliance, credit risk transfer, cyber security and stable market structures all assist with enabling and promoting further market participation. The elimination of OTC bilateral counterparty risk and the market anonymity provided via on exchange trading further incentivise and facilitate larger traditional financial market institutions to support these markets”.
Hosking added: “FEX Global alongside its partner Mercari has extensive derivative product and market design experience. Working alongside industry experts we will continue to add to our suite of environmental derivative products subject to regulatory permissions.”
Large-scale generation certificates (LGCs) are an instrument that is created and sold to incentivise the development of renewable energy power stations in Australia.
LGCs are issued by power stations that generate electricity from renewable energy sources. One LGC is created per megawatt hour (MWh) of renewable electricity generated, and surrendered (or retired) for every MWh purchased. The REC Registry is where LGCs are stored, and is managed by the Australian Government's Clean Energy Regulator.
For further information, visit the Clean Energy Regulator website. https://www.cleanenergyregulator.gov.au/
About FEX Global
FEX Global is an Australian Market Licenced Operator of exchange traded and centrally cleared derivatives contracts.
FEX Global is focused on enabling the optimisation of hedging and risk management for market participants by providing futures and options for both commodity and energy markets, as well as emerging renewable energy and environmental markets.
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