The Nordic Association of Electricity Traders (NAET) has performed an online survey on the usage of bank guarantees as collateral. The result of the survey is presented in a report by Hagman Energy and Sweco Energuide.
The overall conclusions from the survey are clear. All 96 market participants in the survey, with the rare exception of a few banks, expect that liquidity will decrease, that the number of market participants will decrease and that the cost of hedging will increase with the removal of bank guarantees. Market participants also expects that a removal of bank guarantees triggers a move from cleared exchange trading to non-cleared bilateral trading, decreasing transparency and possibly reducing the credibility of the price formation.
The board of NAET decided to conduct this survey as a response to regulators calling for statistical analyses supporting our concerns for the negative impact that we expect the removal of bank guarantees to have on the market. We want to thank our members and other stakeholders, who took part of this survey. The result of this survey will be used in the NAET response to the EMIR consultation. Please, help us and make sure that your company also takes part in the EMIR consultation due on the 13th of August. This report is now official report and those of you that wish to refer to the report in your EMIR consultation are welcome to do this.
The link to the EMIR consultation is http://ec.europa.eu/finance/consultations/2015/emir-revision/index_en.htm.
The Board of NAET