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ECC and NOREXECO to Cooperate in the Commodity Sector
Published on: 12/11/2013
European Commodity Clearing (ECC) and the Norwegian NOREXECO AS have agreed to cooperate in the field of commodity trading and settlement and have concluded a corresponding cooperation agreement to this end. NOREXECO with registered offices in Kongsvinger was established in 2012 and intends to launch an organised and regulated market for derivatives on products from the forestry and paper sector.
“Norway and respectively the Nordic countries are primary producers and exporters of forestry products. With the support from the industry we want to establish an exchange trading platform for renewable raw materials. Our aim is to develop efficient and liquid trading markets and transparent reference prices and thus to support the industry in procurement and risk management”, explains Stein Ole Larsen, CEO of NOREXECO.
NOREXECO plans to launch four financially settled commodity future contracts in spring 2014. This initial trading offer comprises two contracts for pulp (NBSK Softwood Kraft Pulp and BHKP Hardwood Kraft Pulp) and two contracts for recovered fibre (Recovered Paper OCC 1.04 und Recovered Paper ONP/OMG 1.11). For those commodities, standardised futures products will be tradable on a monthly basis with a trading horizon of 20 months. Trading will be subject to the supervision of the Norwegian Financial Supervisory Authority, Finanstilsynet. Clearing and financial settlement of the transactions which will be listed in Euro or US Dollar will be provided by ECC, which will therefore expand its product portfolio with new commodities.
“We are pleased to be able to support NOREXECO in launching this market from the very beginning. As a result, ECC will operate in a new and interesting product environment, entering a global market with excellent growth opportunities which also offers interesting interrelations to our existing product portfolio. Our flexible standard processes enable us to support these products in our integrated clearing efficiently”, adds Dr. Thomas Siegl, Chief Risk Officer of ECC.
European Commodity Clearing (ECC) is the central clearing house for energy and related products in Europe. In its capacity as the central counterparty ECC assumes clearing as well as physical and financial settlement of transactions concluded on CEGH Gas Exchange of the Vienna Stock Exchange, EEX, EPEX SPOT, HUPX, Powernext and PXE or trades registered on these exchanges.
NOREXECO will offer a fully regulated environment for trading derivatives in the wood, recycled fibre and pulp industry. The exchange will provide equal conditions for all participants and facilitates full transparent price information. In cooperation with ECC, we will be able to offer efficient clearing services which enable all Norexeco members to substantially mitigate counterparty credit risk, while at the same time optimizing their exposure to the market.