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EMIR liquidity impact of bank guarantee phase out on Nordic power market

See here for an article on the Reuters website on the impact that the upcoming EMIR rule on bank guarantees will have on the Nordic power market. Nasdaq Commodities own announcement can be found here.

EMIR will not permit bank guarantees to be used as collateral to meet margin requirements. The rules will be applicable from early next year after which market participants will need to post other forms of collateral, such as cash.

The ability to use bank guarantees has made it easier for smaller players to participate directly on the market which has led to a very high clearing rate in the region. Some alternative solutions have been put forward, such as going via financial clearing members. It remains to be seen how liquidity is impacted on the market once the rules come in.

About avivhandler

Aviv is the Managing Director of ETR Advisory, a niche consultancy focused on the regulation of the commodity, energy and financial markets. He has more than 23 years of experience in the financial, energy and commodity markets, covering regulatory compliance, credit, risk and financial technology. Prior to founding ETR, he was Partner at SunGard Global Services, where he built a Centre of Excellence in European Energy and Commodity Regulation. Before that, he founded Coherence, a consulting firm specializing in credit risk in commodity and energy trading as well as software product management. The credit practice ultimately became part of Sirius Solutions, where he was the Managing Director of Europe. He has also held management roles at KWI and Iris Financial, among other organizations. Mr. Handler holds a degree in computer science from Imperial College, University of London.


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