welcome. russell shorto the history of trade & amsterdam
TRANSCRIPT
Welcome
RussellShorto
The History of Trade & Amsterdam
RussellShorto
The History of Trade & Amsterdam
Max vanMeerManaging Director
STX Services
STX Services | Amsterdam and Trade
• Agenda:• What is Trade?
• Examples Environmental Commodity Markets
• Market Outlook
STX Services | Amsterdam and Trade
STX Group
STX Services BV STX Fixed Income
STX Group• 60 employees• 20 nationalities• 1.250 active
customers
STX Services• Renewable Energy• Biofuel• Carbon • CSO• Energy Efficiency
STX Fixed Income• Bonds• Loans• Cash
STX Services | Amsterdam and Trade
What is trade?
STX Services | Amsterdam and Trade
Free Online Oxford Dictionnaires:
1 [mass noun] The action of buying and selling goods and services
STX Services | Trade
Price development of a random asset
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STX Services | Trade
Everyone wants to buy here…
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STX Services | A little history
And sell here…
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STX Services | Trade
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The fact is that we are here today…
STX Services | Trading decisions
STX Services | Trading decisions
What is important:• Timing
• Market access
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STX Services | Timing
Passive trading strategies• Buy when you need it (whatever the price is)
• Buy always at the same date (whatever the price is)
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STX Services | Timing
Active trading strategies:• Average out price
• Actively try to optimize price
• Speculative (prop) tradingweek 1
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STX Services | Timing
Market intelligence• Market fundamentals
• Technical analyses
STX Daily Price Report 12 December 2012
Bio Products
Dutch Diesel Tickets
Dutch Diesel Tickets
Bid Offer
Spot 6.4 6.5 ↑
Dutch Gasoline Tickets
Dutch Gasoline Tickets
Bid Offer
Spot 6.7 6.8 ↑
Certificados de Biocarburantes en Diesel (CBD)
Certificados de Biocarburantes en Diesel (CBD)
Bid Offer
Spot 125 130 ↓
Certificados de Biocarburantes en Gasoline (CBG)
STX Services | Market Access
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Series1Company Volume BID OFFER Volume Company
Company x 20 120 121 10 Company A
Company y 10 118 123 30 Company b
Company z 100 116 125 20 Company c
Market access
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Today
STX Services | Market Access
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Company x 20 120 121 10 Company A
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Company Volume BID OFFER Volume Company
Company z 20 120 121 10 Company C
Company y 10 118 125 30 Company d
Company x 100 116 130 20 Company a
Market access
Tomorrow
(imagine 100 counterparties…)
Today
STX Services | Amsterdam and Trade
Timing in Commodity Markets that are driven by regulation
STX Services | GOO – one year ago
What did we know?• Natural trend: 12-month
expiry (but to what level?)
• Market was long
• Last year average price EUR 25ct
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STX Services | GOO – what actually happened
• Market: France joined system (supply increased from 250mio to 300mio)
• Average price EUR 12ct
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STX Services | CSO - one year ago
What did we know?• Oil market determines
CSO value (backwardation vs contango)
• New EU directive: all countries have to accept each other (but unclear on what type of product)
• Average price level: USD 2.5
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STX Services | CSO – what actually happened
• Market started at premium due to unclear legislation
• Prices continued to normal price levels (USD 2-3) after clarity0
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Diesel
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STX Services | Carbon - one year ago
What did we know?• Market was oversupplied
• Market was waiting for EU decision to take out excess supply
• Start of Phase III
• 85% free allocation instead of 100%
• Rest to buy via governments auction
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STX Services | Carbon – what actually happened
• Impact of Phase III:
• Industrials did not receive allocation till December 2013
• Mainly technical prop trading (12 players)
• One big event: ‘ EUROPEAN PARLIAMENT REJECTS CARBON-LAW FIX PROPOSAL’ (price drops 45% in one day)
STX Services | Certificate Verdi – one year ago
What did we know?• Producers can sell to
government at guaranteed price end of year
• Calculation: (EUR 180 – AEP) x 78%
• Spot market: expected guaranteed price discounted with interest rate
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STX Services | Certificate Verdi – what actually happened
Market drivers:• Upward trend towards buy-back price as expected
• Decline in December?
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CV 2013 Q1 CV 2013 Q2 CV 2013 Q3 CV 2013 Q4 Buy Back Price 2013
CV 2013 GSE buy back price: 89.28 Eur/MWh
STX Services | Certificate Verdi – what actually happened
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CV 2013 CV 2012 Buy Back Price 2012 Buy Back Price 2013
CV 2012 GSE buy back price: 80.34 Eur/MWh
CV 2013 GSE buy back price: 89.28 Eur/MWh
STX Services | Conclusions
First conclusions:• Understanding regulation can predict trends• Constant threat of regulatory changes (can have a
quick and significant impact) • Markets make unexpected movements
STX Services |What will move these price graphs?
• (28 EU member states….)
• ‘Energiewende’ in Germany
• Shale gas in US
• Subsidizing local industry?
• Cost of the system (Windfall profits, adverse incentives, Fraude)
• Court case ‘Ålands Vindkraft’ • Only carbon targets…?The outcomes of above discussion will lead to changes in regulation, that will affect prices
STX Services |Main Conclusion
You need to cooperate with the best (Environmental) Broker company in Europe
STX Group
STX Services
STX Fixed Income
STX Services |
THANK YOU!
Max vanMeerManaging Director
STX Services
Drinks &DinnerNow: Drinks & Bites at EYE
18h30 Boat trip with Dinner & Cocktails
21h00 Stopover at NDSM
23h00 Boat return at Amsterdam Central Station