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Turkish energy exchange expects liquidity growth in 2022 after launch of three platforms – CEO


LONDON (ICIS)–Turkey’s energy exchange (EXIST)
expects trading activity growth across all
traded commodities in 2022 as it has already
completed the launch of three platforms this
year and awaits market changes, the bourse’ CEO
Ahmet Turkoglu said.

Speaking to ICIS, Turkoglu confirmed the
natural gas futures market (NFM) was launched
on 1 October and said he expected the number of
participants who are now active on the spot gas
platform to rise from 50 to 300 across both as
power plant operators, distribution companies
and industrial consumers are set to join.

NFM will allow companies to trade monthly,
quarterly and annual contracts.

“Seventeen contracts will be open for trading,”
he said.

“Our participants will be able to make
transactions for the following 12 months, the
following 4 quarters, and the following year.
On the other hand, I can say that we have
robust collateral and default management,
market operations and financial settlement
mechanism for our natural gas futures market,”
he said.

An important feature of the market is that the
base price for future contracts will be
calculated using a combination of the Turkish
spot reference price data, Brent, Henry Hub and
TTF prices.

EXIST already operates a spot gas market and
Turkoglu said close to 5 billion cubic metres
traded on the platform since it was launched
three years ago.

Some Turkish shippers said the volumes were
small compared to Turkey’s annual demand, which
is set to reach a record 60bcm/year in 2021.
They say the market could only develop once it
is deregulated and the monopoly of the
incumbent BOTAS whittled down.

However, Turkoglu says he is confident volumes
may grow as more participants will be attracted
to the spot and futures market.

Proposed
amendments
to unbundle the incumbent BOTAS
and reduce the market share of the new BOTAS
trading offshoot could help promote competition
and increase liquidity, shippers say.

EXPANDING ELECTRICITY TRADING

Turkoglu said that EXIST had also clocked up
achievements in the electricity sector, where
it launched a power futures market in June
2021.

“We have observed a steady increase in the
number of registered market participants. We
believe the power futures market platform will
provide a strong price signal for the market in
the near future,” he said.

Since its launch in 2015, the Turkish daily
spot electricity market has attracted 1461
participants, who are now active on the
platform.

Turkoglu says traded volumes on the spot
electricity market saw a year-on-year increase
of 17% in the first eight months of 2021.
Volumes traded over the same period last year
stood at 181.36TWh.

“Looking at these figures, I can say the day
ahead market operated by EXIST is one of the
biggest day-ahead markets in Europe.”

“This is the market with the highest volume
[operated by EXIST]. It is also the most
complex one with an algorithm-based structure
and the software of this market has been
developed completely in-house and that works
smoothly.

“We also encourage academics and young
professionals to contribute improvements in the
technical infrastructure of our market through
participating in algorithm competitions that we
organise each year. Additionally, we have a
dedicated optimisation team working on
developing and improving the algorithm,” he
added.

Turkoglu said the biggest expectations for 2022
was for the electricity and gas spot and
futures markets to harmonise, giving companies
the possibility to trade seamlessly across
platforms.

Finally, he said the launch of green
certificates, so-called YEK-G in Turkish, in
June 2021 allowed companies to track the origin
of renewable energy and to ensure they reached
emission reduction targets.

“I can say that 2021 was the year of EXIST. I
think 2022 will be an active year for the
natural gas market and we will focus more on
becoming a regional natural gas hub,” he added.



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