Dear Mrs. Ioana Drăgan, with all the difficulties in the market or perhaps in response to these, BRM has recently launched transactions based on forward products with BRM as the central counterparty. How were these new tools received?
Starting from August 2019, the Romanian Commodities Exchange – BRM has launched the market for forward products with central counterparty mechanisms offered by BRM. The new platform currently allows medium-term contracts (week and month). At the same time, in September, BRM launches the transactions based on forward instruments for the semester and year, also with BRM as the central counterparty. We have favorable premises to estimate an increase in the number of participants and transactions on this market during the fourth quarter of this year.
What are the benefits for those who use these tools?
The main advantages of these instruments are the guarantee of the transaction for both the seller and the buyer, as well as the reduction of the level of bank guarantees up to 5 times for the market participants. The complex system with 3 margins – initial, on variation and on delivery – makes it possible to provide the services of central counterparty, with BRM as the guarantor of the transactions.
In order to meet the demands of the market, BRM organizes in October a working session in which it will present the functional and guarantee mechanisms, the regulations, the contractual framework and the trading advantages. This is basically a market where participants have the opportunity to opt for natural gas products from a diversified portfolio intended for trading on the BRM natural gas market.
We know that you had been planning to launch on the BRM the futures contracts with physical delivery. Where you stand with this project?
We have been working on creating a market as liquid as possible and developing complex products for the gas market in Romania; thus, the BRM strategy in the short term provides for the introduction on the BRM platform of futures instruments with physical delivery, with mechanisms of central counterparty provided by BRM, ,starting with January 2020.
What are your expectations for these new tools’ evolution?
The development of these products came as a result of the analysis of the development prospects of the Romanian energy sector. At the same time, the need of the participants in the market operated by BRM has always imposed the directions of development of the supplied products. BRM is a company that has focused its efforts to keep up with the trends in the sector, based on placing the customer at the center of business development decisions.
Do the discussions about repealing GEO 114 encourage or frighten you?
Despite the legislative challenges, the role, function and benefits of using the commodity exchange for the national economy cannot be denied. Benefiting from significant market experience, BRM continues to be the market leader in natural gas transactions in Romania, operating approximately 70% of domestic natural gas consumption in Romania. In the current European energy architecture, BRM as a market operator actively encourages Romania to play an important role in the regional context by developing a free and transparent market for a long-term sustainable economy.