NOREXECO launches derivatives exchange platform for the pulp and paper industry - ECC to provide clearing services for new products
Today, NOREXECO ASA is set to start exchange services for the pulp and paper industry, becoming the world´s only derivatives exchange for this sector. NOREXECO is supported by European Commodity Clearing (ECC), Europe’s leading clearing house for energy and related products, which will provide clearing and settlement for the newly launched contracts.
NOREXECO has been granted a license by the Norwegian Ministry of Finance, which covers financial derivatives within forestry and paper. The first products listed on NOREXECO are two financially settled pulp contracts (NBSK Softwood Kraft Pulp and BHKP Hardwood Kraft Pulp). The estimated market size on pulp in the open market is approximately 60 million tons with a market value exceeding 50 billion USD. Financial contracts have recently only been available in the OTC market.
NOREXECO offers a fully transparent trading system with equal risk management opportunities for all participants. From launch date on NOREXECO will set closing prices and offers the registration of block trades for clearing. Trading will be compliant with national regulations and all transactions will be cleared through ECC, based in Germany. NOREXECO and ECC have been closely working together since early 2014.
“We are very excited about opening the exchange”, says Stein Ole Larsen, CEO of NOREXECO. “We have received great interest from participants around the world. To start a unique exchange platform for pulp from the Norwegian forestry hub Kongsvinger just outside Oslo has taken some time, but now we are ready to start and are proud of what we can offer to our growing member base.”
“Through the cooperation with NOREXECO, we extend our clearing offering to a completely new asset class”, comments Dr. Thomas Siegl, Chief Risk Officer of ECC. “Offering clearing services for NOREXECO forms yet another milestone for us towards moving to a multi-commodity clearing house. Our standard procedures and processes as well as the uniform risk management approach integrate both existing and upcoming commodity markets.”
Larsen adds that his ambition is to give both the industry and the financial sector a regulated exchange for financial contracts. “Despite the fact that it is nearly the same size as the aluminium market, the pulp market does not have an exchange for trading. In a volatile world with great challenges we have been welcomed as a stabilizing factor. We are very optimistic about the opportunity to supplement and to move a share of the trading from the bilateral OTC market to a fully regulated and secure marketplace. It is about time that the forestry and paper industry gets the same opportunity for risk management as other mature industries”, Stein Ole Larsen adds.
NOREXECO is a regulated commodity exchange specialized for the global pulp and paper industry. NOREXECO offers trading in cash settled financial futures. These instruments are used to manage price risk for market participants like producers and consumers as well as being a trading opportunity for commodity trading firms. Together with strong partners like European Commodity Clearing (ECC), Deutsche Boerse Group and FOEX Indexes Ltd, NOREXECO brings market participants from many regions together around a common liquidity pool in an otherwise fragmented trading environment. Anonymous trading, transparency, guaranteed settlement and investor protection within a regulated environment makes NOREXECO an attractive marketplace for hedging and trading. www.norexeco.com
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, Gaspoint Nordic, NOREXECO, Powernext and Power Exchange Central Europe, or registered for clearing on these
exchanges. For more information: www.ecc.de