How to increase liquidity when Nasdaq Commodities moves Market Making to Futures contracts in Nordic Electricity

The Nordic Association of Electricity Traders (NAET) recognizes that Nasdaq Commodities intends to move existing Market Makers from DS Futures to Futures in November 2016.

A mini-poll, conducted by NAET in May, shows that while financial counterparties prefers trading in Futures, fundamental counterparties still prefers DS Futures. NAET key focus has always been liquidity and transparency in the Nordic Power Market.

The board of NAET firmly believes that even though the move of existing Market Makers to Futures contracts could impose a threat of splitting liquidity it could also, if done correctly, encourage liquidity. The key in order to encourage liquidity, are combination contracts. These so-called combos will pool liquidity from Futures to DS Futures and vice versa.

The board of NAET challenges financial counterparties to sign up with Nasdaq to become Market Makers on combination contracts between Futures and DS Futures. Market Making in these combo contracts would benefit everyone in the market, pooling the liquidity into both contract types. This way, everyone can trade his or her preferred contract type without worrying about splitting liquidity.

The Board of NAET