i-sem business liaison group nemo presentation 26 january 2… · block orders for the intraday...

26 January 2018

I-SEM – Business Liaison Group NEMO

1

SEMOpx Implementation Update Block Orders for the Intraday Continuous Market Foreign Exchange Rate SEMOpx Statement of Charges

SEMOpx Interim Consultative Forum

Interim Modifications Process Market Coupling Facilitator Recovery of Costs related to Invalid Contracted Quantities Previously Raised Rule Changes x2 Liability

2

Agenda




3

Agenda

Prep. Go-live

Vendor Development Testing Market Trial

DAM - Framework Agreement

IT & Process Regional, MRC/PCR &

Member Tests

IDM - Framework Agreement

IT & Process Regional &

Member Tests

Clearing On-boarding

Exchange On-boarding

PCR / EUPHEMIA CR Process

#N18: DA Regional Coupling

Framework Agreement (15/4/17)

#N50: ID Regional Coupling Framework Agreement (1/5/17)

#N99: Regulator approved Framework

Agreement for DA Regional Coupling

(1/6/17)

#N51: Regulator approved Framework Agreement for ID Regional

Coupling (1/7/17)

#N6: MRC Approval (1/4/18)

#N52: DA - MRC, Regional &

Member Test complete (30/4/18)

#N55: ID Regional Test Complete

(30/4/18)

#N61d: PCR CR Final Decision

(31/10/17)

#N61b: PCR CR Progress Report

(31/3/17)

#N61c: PCR CR Progress Report

(31/1/17)

KEY: RA Milestone; TSO Milestone

Solution Delivery

Regional Coupling

On-Boarding

PCR Process

Implementation Programme

5

Previous Meeting Minutes & Actions

No. Action Resolution Status

298 RAs to Clarify reasonable tolerances between trades and PNs

In NEMO BLG 26/01 Closed

299 SEMOpx to request feedback from Exchange Members on the rule change proposals

DONE – email sent out 7/12/2017

Closed

300 SEMOpx to consider feedback received as part of proposed rule changes and present finalised rule changes at next NEMO BLG

Done – to be presented at Interim SEMOpx Consultative Committee 26/01

Closed




6

Agenda

Pre-Defined Block Rationale

One baseload block covering periods 1-48

Manage unit commitment and spread fixed costs across full-day where position not established through DAM/IDA

Three 8 hour blocks Manage unit commitment and spread fixed costs across a longer period intra-day where position not established

Six 4 hour blocks Widespread support from participants

Twelve 2 hour blocks Access shorter blocks to allow participants to trade in and out of positions in advance of the balancing market and manage scheduling risks.

7

Pre-Defined Blocks for Intraday Continuous

22 Pre-Defined Blocks to be offered in IDC for Go-Live

8

Pre-Defined Blocks for Intraday Continuous

• 8 originally proposed pre-defined blocks (baseload, peak, etc) not included – concerns re complexity and over-lapping nature of blocks

• Increased number of blocks will increase complexity of user interface

• Recommend reviewing effectiveness after 12 months operation – based on experience. Manage change through consultative committee.




9

Agenda

• Current signed-off solution in SEM and SEM-GB: – SEMO (EirGrid/SONI) retrieves the FX Rate on D-2 from the ECB website at

16:00 CET – Distributed to the SEM-GB NEMOs – Same rate applied to DAM, IDA 1 and IDA 2 – Agreed with all Regional Partners – important to align a single GBP rate

across SEM and GB markets

• Current solution in GB for the DAM: – Nord Pool receive FX Rate from Nordea 15 mins before DAM gate closure – Nordea continuously update FX rate – Nord Pool publish the rate used on their own website – Nordea publish rates 4 times a day

• Issue: NGIL have stated that while they are in favour of a transparent rate

they could not accept one published so far in advance of the DAM gate closure

FX Rate - Background

• FX rate is used to convert GBP bids/offers into Euro

• Results provided in GBP using same FX rate

• ECC use separate FX rate to settle contracts

• SEMOpx preferred solution: – Transparent rate that is static and traceable

– Published by a reputable source

– Maintain the same rate between SEMOpx and SEMO

• ECB Rate published at D-2 satisfies these requirements – we acknowledge a rate closure to the DAM gate closure reduces

exposure to rate fluctuations

11

FX Rate - Requirements

1. Multiple GBP FX rates

– SEMOpx uses GB Solution, SEMO uses ECB D-2 rate

• System and procedural changes

• SEM Participants dealing with 2 FX Rates between SEMO and SEMOpx

• Less transparent

– SEMOpx and SEMO using ECB D-2, GB parties using current GB solution

• Lower system and procedural changes

• Participants that operate in both GB and SEM will need to manage 2 FX rates

• May need additional agreements, likely additional costs

2. SEMOpx and SEMO address the timeliness issue of transparent rate

– Lowest system and procedural changes

– Modification to TSC for timing of FX rate publication

– Changes to the systems to interface with new FX rate

FX Rate - Options

• Identify publicly available source that satisfies SEMOpx requirements and NGIL concerns over timeliness

• Seek agreement from NGIL

• Apply changes to solution

• TSC modification procedure will be followed

13

FX Rate – Next Steps




14

Agenda

15

Statement of Charges (1 of 3)

• The published SEMOpx Tariffs are for the period 23 May 2018 – 3 October 2019

Fee Structure Cost

Once off entry fee €5,000

Annual subscription fee (€ for first 16 months of SEMOpx) €5,000

Variable trading fee DAM (per MWh) €0.044

Variable trading fee IDM (per MWh) €0.044

• The Annual Subscription Fee for SEMOpx Members covers up to one M7 user login and two ETS user logins. Additional user logins will incur additional fees, per user login per system.

System Cost

M7 (€ per additional user login for the 1st 16 months of SEMOpx) €733.15

ETS (€ per additional user login for the 1st 16 months of SEMOpx) €733.15

16

Statement of Charges (2 of 3) • SEMOpx charges will be invoiced on a monthly basis by ECC on SEMOpx’s behalf on

the [5th] ECC working day after the end of the calendar month

• Exchange Members will pay these fees through their Clearing Member or as a Direct Clearing Participant as applicable on the 15th ECC working day after the end of the calendar month

• SEMOpx charges will not be invoiced until after I-SEM go live. ECC will invoice for the first 9 days of the new market (23rd May to 31st May) on 7th June 2018

• The invoice issued in June in relation to May will include:

total once off entry fee;

M7 and ETS additional user fee as applicable; and

variable DAM and IDM trading fee (per MWh) for the first 9 days of the market

• The annual subscription fee will be invoiced from June onwards (1/16th of €5k ie. €312.50 will be invoiced each month)

17

Statement of Charges (3 of 3) ECC Product Group Name Trading Curr Fee Curr Inv. Template Fee Amt

SEMOPX_ST_POWER_EGRD Irish Power Day-Ahead SEM EUR EUR EGRD.EUR 0.044

SEMOPX_ST_POWER_SONI Northern Irish Power Day-Ahead SEM GBP GBP SONI.GBP 0.039

SEMOPX_IT1_POWER_EGRD Irish Power Intraday No.1SEM EUR EUR EGRD.EUR 0.044

SEMOPX_IT2_POWER_EGRD Irish Power Intraday No.2 SEM EUR EUR EGRD.EUR 0.044

SEMOPX_IT3_POWER_EGRD Irish Power Intraday No.3 SEM EUR EUR EGRD.EUR 0.044

SEMOPX_IT1_POWER_SONI Northern Irish Power Intraday No.1 SEM GBP GBP SONI.GBP 0.039



SEMOPX_IT_POWER_EGRD Irish Power Intraday SEM (Continuous) EUR EUR EGRD.EUR 0.044

SEMOPX_IT_POWER_SONI Northern Irish Power Intraday SEM (Cont.) EUR GBP SONI.GBP 0.039

SEMOPX_FF_ANNUAL_EGRD Annual Membership Fee EirGrid - EUR EGRD.EUR 5,000

SEMOPX_FF_ANNUAL_SONI Annual Membership Fee SONI - GBP SONI.GBP 4,400

SEMOPX_FF_TECHNICAL_EGRD Technical Fee EirGrid - EUR EGRD.EUR 733

SEMOPX_FF_TECHNICAL_SONI Technical Fee SONI - GBP SONI.GBP 645

SEMOPX_FF_ENTRY_EGRD Entry Fee EirGrid - EUR EGRD.EUR 5,000

SEMOPX_FF_ENTRY _SONI Entry Fee SONI - GBP SONI.GBP 4,400

SEMOPX_FF_ARANNUAL_EGRD AOLR Annual Service Fee EirGrid - EUR EGRD.EUR

SEMOPX_FF_ARANNUAL_SONI AOLR Annual Service Fee SONI - GBP SONI.GBP

SEMOPX_FF_ARVARIABLE_EGRD AOLR Volume Based Fee EirGrid - EUR EGRD.EUR

SEMOPX_FF_ARVARIABLE_SONI AOLR Volume Based Fee SONI - GBP SONI.GBP

SEMOPX_FF_ARENTRY_SONI AOLR Entry Fee EirGrid - EUR EGRD.EUR

SEMOPX_FF_ARENTRY_EGRD AOLR Entry Fee SONI - GBP SONI.GBP

€:stg£ rate of 0.88 used for illustrative purposes Structure of AOLR fees not yet determined

Updated

Resources to provide further information on the Ex-Ante Market Credit Cover arrangements are provided below.

• A training module is available on the learning platform under the “SEMOpx Settlements | SEMOpx (ECC) Credit Risk”. If you do not have access to the trading platform this can be arranged by contacting [email protected]

• Information was also provided in a previous BLG on this topic. Slides from this are available here

• Specific questions can be sent to us at [email protected] or directly to ECC [email protected]

18

Ex-Ante Credit Cover

NEW NEW

mailto:[email protected]





http://www.sem-o.com/ISEM/General/NEMO Settlement and Banking Session 16.02.2017.pdf










19

Agenda




20

Agenda

• K.4 sets out the need for an Interim Consultative Forum until the enduring Exchange Committee has been appointed

• Purpose: to consult on further development and finalisation of proposed Rules and Procedures

• Changes to the Rules have arisen to facilitate unforeseen concepts and to modify certain paragraphs

• Finalisation of the Procedures is needed

21

Interim Modifications Process - Background

22

Interim Modifications Process

23

Interim Modifications Process - Procedures

Date Next Steps

5th May 2017 Draft SEMOpx Operating Procedure issued.

13th February 2018 Updated version to be issued and communicated to Market Participants at the BLG. The expected changes cover (but not limited to); • Product Types, Auction Timings, general tidy up and removal of sections.

14th March 2018 The final (baselined) version of the Operating Procedure will be issued for consultation. This version will include; • The SEMOpx Fallback and Backup Procedure;

o Addresses any required deviation from the normal auction processes and timelines.

Post March 2018 Additional modifications to the Operating Procedure may be identified. Establish enduring SEMOpx Consultative Committee and relevant procedures

• Any changes to the Rules are approved by the Regulatory Authorities

• C 2.4.3 No Trading when Not Authorised under TSC – 26 Jan

• C 2.4 Trading Halt – 26 Jan

• Market Coupling Facilitator – 13 Feb

• Please note, during the interim period, SEMOpx will not be in a position to process Modification Proposals. Any proposals received prior to I-SEM Go-Live will be stored and addressed as soon as practicable under the enduring mods process.

24

Interim Modifications Process - Rules




25

Agenda

MCF – Background – Regional Coupling

Cross-zonal Capacities and Constraints For Moyle, EWIC, and ROI-NI

Pre-coupling Coupling

PMBs

Market Participants

Bids & Offers

CZC for SEM

Participants’ bids and offers

NP submit CZC for IFA EPEX submit CZC for Britned

MCF – Background – Regional Coupling

Validation of Results Financial Settlement Physical Settlement Congestion Rent

Shipping

Final PMB Results

Netting of financial positions between CCPs

Submission of XB Nominations

Collection of congestion rent and submission to JAO (acting on behalf of the ICOs

Post-coupling

• SEMOpx is responsible for the allocation of the interconnector capacity

• The congestion rent is the consideration for the allocation of capacity

• For the congestion rent to be collected ECC must clear the capacity

• To clear the capacity it must be a product on the Exchange – Market Coupling Contract (MCC)

• The MCC is only available to one member type -> the Market Coupling Facilitator (MCF)

• Only Interconnector Owner (or their agent) may become the MCF

• Changes to the Rules necessary

• Does not impact other member type

• Draft Rule and Procedure changes will be presented 13 Feb

28

MCF – Market Coupling Contract




29

Agenda

3 - Invalid Contracted Quantities - Background

• A modification has been raised to the TSC to provide a workable solution to how specific low probability risks related to imbalances, due to invalid Ex-Ante Market Contracted Quantities, are mitigated in the I-SEM, given the interrelationship between the Ex-Ante Markets and Imbalance Settlement.

• Some elements of the solution would potentially require changes to the SEMOpx Rules, ECC Clearing Conditions, and Trading and Settlement Code.

• Presented last time Consultative Forum on this

• Queries raised and comments received since then to be addressed today.

• Revised proposal provided today

3 - Invalid Contracted Quantities - Scenarios

Scenario Probability

Exchange Member trades in the Ex-Ante Markets before a Unit is effective in the Balancing Market

Extremely Low

Exchange Member trades in the Ex-Ante Markets while a Trading Halt should have been in effect.

Very Low

Exchange Member trades in the Ex-Ante Markets while a Suspension of the relevant Unit from the Balancing Market is in effect.

Extremely Low

• 6 sets of comments received (3 agreed, 3 had reservations)

• Main Themes of Comments – Exchange Member responsible firstly (6)

– Should never occur if automated processes (2)

– Use of Ex-Ante Collateral (1)

– Use Balancing Market Collateral (1)

– Incentives for SEMOpx to be careful (1)

– SEMOpx should cover risk and imbalances (3)

– Not all Exchange Members as a cost recovery measure (1)

– SEMOpx Rules allow all avenues for recovery (1)

– Reporting on occurrences by SEMOpx (1)

– Don’t include default fund concept (6)

32

3 - Comments and Responses

(x) Indicates number of responses that raised this point

Amendments to Proposal

Addition of trading out of Invalid Contracted Quantity positions as

first step

Confirmation that high likelihood of recovering costs (before impacting imbalance settlement payments)

Use of Clearing Member or Direct Clearing Member collateral held with ECC

Removal Default Fund from mitigations ? Removal of socialisation of costs with all Exchange Members

33

34

3- Invalid Contracted Quantities – Recovery of Costs

1 • ECC instruct the Exchange Member to close invalid contracted quantities by countertrades or will trade in Ex-Ante

Markets to close position/minimise costs

2 • ECC withholding payment to the Exchange Member for the value of the invalid Contracted Quantities therefore

minimising the costs needing recovery

3 • ECC to charge the Exchange Member that caused the invalid Contracted Quantities through trading in the Ex-Ante

Markets, when not authorised to do so

4 • ECC to recover costs from the Exchange Members Clearing Member or Direct Clearing Member Ex-Ante Market

collateral (as applicable)

5 • ECC to inform SEMO if payments cannot be recovered in time for Balancing Market payment deadlines. SEMO to

withhold any payments for the relevant Units in Imbalance Settlement to minimise the costs needing recovery

6 • SEMO to draw down on the Balancing Market posted credited cover for the Participant of the relevant Units prior

to payments out due date

7 • Where the issue can be attributed to SEMOpx’s service provider, recovery of costs through liability provisions

ECC Clearing Conditions

Service Provider Agreements


TSC Mod

TSC Mod



*Items in purple added, default fund and charge all Exchange Members removed based on feedback

4 – All Avenues for Recovery of Costs

Rationale for Change

• To ensure SEMOpx Rules allow for “all available avenues to recover costs” of the Invalid Contracted Quantities from the Exchange Member.

• SEMOpx Rules clause G.3.3.1 means an Exchange Member is required to indemnify SEMOpx for losses and expenses arising from its breach of the Rules or the Procedures.

• Each of the situations that give rise to an invalid Contracted Quantity will now be a breach of the Rules.

• However, an additional clause in section G.3.3 so that the imbalance amount due to the invalid Contracted Quantity under the TSC is still considered a loss for SEMOpx under clause G.3.3.1 would provide further weight to ensuring SEMOpx has available all avenues to recover costs.

• Rule Amendment “G.3.3.3 Where a breach of these SEMOpx Rules by an Exchange Member results in a Contracted Quantity submitted under paragraph F.2.2.1 of the Trading and Settlement Code being invalid under clause G.2.10 of that Code, for the purposes of the indemnity in paragraph G.3.3.1, the relevant Reassigned Amount (within the meaning of that Code) shall continue to be regarded as a loss incurred by SEMOpx.”

Note: G.2.10 is to be included as part of the legal drafting for MOD_17_17

36

4 – All Avenues for Recover of Costs




37

Agenda

38

Previously Raised Rule Changes

RefNo.

Title Description Status

1 No Trading when not authorised under TSC

Additional criteria to clause C 2.4.3 so that Exchange Member has the responsibility to not trade prior to the effective date under the TSC [adding to criteria of having responsibility to not trade when suspended or has a trading halt relevant under the TSC]

New

2 Trading Halt if Clearing House requests

Where Clearing House requests, SEMOpx can halt trading activity of an Exchange member (e.g. one or more of DAM, IDM1, IDM2, IDM3, IDC).

New

• Text Change “C 2.4.3 An Exchange Member shall not submit Orders in respect of Units registered in respect of a Participant under the Trading and Settlement Code where:

a) the Order is for a Trading Period prior to the effective date and time of the Unit before the Unit’s registration under the Trading and Settlement Code takes effect;

b) the Participant has been Suspended under the Trading and Settlement Code; or

c) the Market Operator is prohibited from accepting notification of Contracted Quantities in respect of that Participant under paragraph G.12.3.2 of the Trading and Settlement

Code. ”

39

1 - No Trading when Not Authorised under TSC

• Rule Amendment “C 2.4 Trading Halt C 2.4.1 SEMOpx may declare an Exchange Member to be subject to a Trading Halt if:

a) the Exchange Member breaches these SEMOpx Rules, the Procedures or the Exchange Membership Agreement and SEMOpx considers that the breach adversely affects the operation of any of the Trading Systems or another Exchange Member’s ability to interface with those systems;

b) SEMOpx is aware that paragraph G.12.3.2 of the Trading and Settlement Code applies and, in accordance with that paragraph, the Market Operator is prohibited from accepting Contracted Quantities submitted by any Scheduling Agent in respect of a Participant who has a Unit or Units registered under the Trading and Settlement Code for which the Exchange Member is authorised by SEMOpx to submit Orders (with a term in italics in this paragraph having the meaning given in the Trading and Settlement Code);

c) SEMOpx considers that it is necessary to do so to ensure the integrity of the Exchange in light of the SEMOpx Objective and SEMOpx Principles; or

d) SEMOpx considers that the Exchange Member may have breached one or more of the conduct provisions set out in Chapter D;

e) SEMOpx is are requested instructed to exclude an Exchange Member from trading by the Clearing House in accordance with the Clearing Conditions Rules.

40

2 - Trading Halt if CCP request




41

Agenda

42

I-SEM Project – Contact Details

Web: http://www.sem-o.com/isem/Pages/Home.aspx

Email : [email protected]

THANK YOU!

http://www.sem-o.com/isem/Pages/Home.aspx








i-sem business liaison group nemo presentation 26 january 2… · block orders for the intraday...

Documents