New Services to the European Power Markets

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New Services to the European Power Markets
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Outline

• Overview IMAREX ASA
• The new European clearing solution
• Background
• Products
• The new trading facility
• Products
• Solution

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Overview IMAREX ASANOS Clearing ASA

• NOS founded in 1987 to clear the Norwegian
  financial derivative market
• Operation sold out in 2006
• Started with commodity clearing in 1995
• Clearing operations of the Nordic power market
  1995- 2004
• Clearing of the freight markets started 2000
• Clearing of bunker/fuel oil 2005
• The leading clearinghouse for the maritime
  industry
• More than 95 of the tanker derivatives
• Approx 30-35 of the dry cargo derivatives

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Overview IMAREX ASAInternational Maritime
Exchange

• IMAREX founded in 2000
• Lifted the FFA market to new standards
• Introduced clearing (NOS) to the shipping
  industry
• First regulated marketplace
• Today freight and fuel oil
• Transparency in multiple channels
• Imarex screen
• Reuters Bloomberg
• Market access thru multiple channels
• Direct screen trading
• Via clearing brokers, GCM
• Via OTC brokers

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Overview IMAREX ASA2006

• IMAREX and NOS merged
• Listed on Oslo Stock Exchange in September
• Acquisition of M3 Kraft, Guardian and NENA

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Overview IMAREX ASABuilding a leading
Multi-Commodity Marketplace
Ticker OSE IMAREX
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Overview IMAREX ASA
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Growth in membership
164
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Overview IMAREX ASA
Seafood
Fuel Oil
Coal
Nat Gas /LNG
CO2
Freight
Power

• Commodity markets are linked together
• Base commodities are interchangeable depending
  on supply and price

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CLEARING OF POWERfrom 14.12.2007We have seen
the need for a better clearing solution
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CLEARING OF POWERA more complete solution

• Combined market both Nordic and German
• Netting between Nordic and German products
• And later other European markets
• More flexible membership structure
• Both direct membership and thru GCM
• Introduce new products together with the needs of
  the market, together with the players
• Short lead time

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CLEARING OF POWERA more complete solution

• Simple and cost efficient to trade and clear
• Better option product
• Asian options
• Margining the smile
• IMAREX is commercially strong
• We are proven to be flexible, responsive and
  market oriented
• We have cleared the Nordic market before

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CLEARING OF POWERBase and Peak product at System
and at Phelix

• Futures (traded as strips)
• 7 week contracts
• 7 month contracts
• Up to 11 quarter contracts (this year next 2)
• 6 calendar contracts
• CFDs (ARH, CPH,HEL, OSL, STO).
• Next month
• Next 3 quarters
• Next 3 years
• GER is a synthetic spread between System and
  Phelix
• European Options, exercise 3rd Thursday in the
  month
• Asian Options

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CLEARING OF POWER

• Open after Nordic and German calendars
• Norwegian working days
• If closed in Norway, but open in Germany, OPEN
• Opening hours 07.30 16.30 CET
• Straight through clearing (STP)
• Forward curve will be set at 16.30 CET
• Outside this we offer pending clearing

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CLEARING OF POWERNo fixed fees!

• Basic fee 0.005 /MWh on futures
• 0.5 of Option premium, maximum fee 0.0045 /MWh
• Discount on actual paid clearing fee on total
  volume in the same traded quarter

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CLEARING OF POWERDirect Membership Requirements

• Net capital of equal to EUR 1 million
• EUR 100.000 if licensed and supervised by FSA,
  CFTC etc.
• Based in a jurisdiction approved by NOS
• Audited accounts
• Provide information regarding ownership, members
  of the board, financial information etc
• Experience/knowledge in Trading Risk Management

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CLEARING OF POWERGeneral Clearers

• MF Global UK Ltd
• Macquarie Bank Ltd
• Calyon Financial SNC
• JP Morgan Securities Ltd
• Deutsche Bank AG
• Carnegie
• First Securities
• Kaupthing
• ABG Sundal Collier

Global agents
Local Norwegian Agents
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CLEARING OF POWERWhats new and better?

• Clearing and netting of both markets
• Identical product structure (both base and peak)
• Better option product and margining netting
• More client friendly fee structure
• Flexible membership
• Easy access to other markets within IMAREX

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NOS Direct ASfrom 14.01.2008The new market
platform for trading of NOS only cleared European
futures and options
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NOS DIRECT - The front solutionGoal

• Easy and cost effective trading to members and
  brokers
• New business model A stronger link to OTC
  brokers
• Together with clearing - a very competitive
  solution
• Increase the volumes
• Regulatory framework, rulebook, standard
  agreements

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NOS DIRECT - The front solution Product and
service

• Electronic trading platform (Trayport) with a
  straight through clearing process
• Same product structure as clearing
• Registration of pre-matched trades for clearing
• Forward curve
• Helpdesk service for members, brokers and NOS

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NOS DIRECTEqual rights and benefits for all
participants
NOS Direct
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NOS DIRECTBrokers

• Nordic based
• HWh
• ICAP
• Imarex Energy (PowerCarbon)
• SKM
• QEB
• London/Continental based
• GFI
• ICAP
• Tradition Financial Services GmbH (TFS)
• Tullet Prebon
• Spectron

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NOS Clearing ASA - Capital structure
OWN CAPITAL 65 MNOK 10 MUSD

• In line with standard recommendation among
  clearing houses
• Flexible capital structure makes it easy to
  expand with a growing market

RADIAN ASSET INSURANCE260 MNOK 40 MNOK
OWN CAPITAL33 MNOK 5 MUSD
SWISS RE INSURANCE 260 MNOK 40 MUSD
OWN CAPITAL 130 MNOK 20 MUSD
INDIVIDUAL MARGIN 2.300 MNOK 350 MUSD
INDIVIDUAL BASE COLLATERAL200 MNOK 30 MUSD
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We are expanding our coreFrom shipping exchange
to multi-market, multi-function player

• Core commodity markets today
• Freight
• Fuel-oil
• Power
• Emission
• Fish

Core functions today Exchange Clearing Broke
rage Analysis