5 Questions… About OTC electricity and gas trading

1. What exactly is the OTC market?

OTC stands for over-the-counter—that is, trading directly between two market participants, without going through an exchange such as EEX or ICE. Typical participants include energy suppliers, municipal utilities, industrial customers, traders, and brokers. In the past, this trading often took place via phone or email; today, the majority of it occurs on digital platforms. These include Trayport and Enmacc, among others, although the latter is more of a modern tendering platform for requests for quotes, schedules, and sales trading prices and does not solely reflect energy prices.
 

2. What is the difference between exchange trading and OTC trading?

In energy trading, there are essentially two ways to trade electricity and gas: on an exchange or OTC. Financial futures are often traded on exchanges. These involve strict rules and high reporting requirements. With OTC trading, everything is more direct: two parties, one deal, and no central clearing house. This has advantages: OTC trading is flexible, fast, and perfect for physical forwards. Plus, you don’t need exchange accreditation—ideal for many market participants who want to get started without much hassle.
 

3. What is sales trading?

Essentially, sales trading is also a form of OTC trading, but the difference lies in the pricing: In sales trading, the pure, actual energy price is typically obscured by markups and commissions within the sales trading price set by the trading partners. On the OTC trading platform Trayport Joule, however, pure, actual energy prices are traded. Any applicable trading fees or commissions are treated separately, resulting in greater transparency.
 

4. How has the OTC market changed?

The old “I’ll give you a call” style of trading has evolved into professional, digital trading. Transparency, speed, and smart access are now the norm. One indicator: Around 80 percent of European OTC volume is now traded via Trayport Joule. As the energy market has grown overall, the OTC sector has also taken off. Many market participants want not only to hedge risks but also to actively capitalize on market movements. What they need to do this: transparency, live prices, fast execution, and minimal paperwork.

5. How can Vattenfall customers participate in the OTC market?

This is exactly where Vattenfall comes in, making it easy to get started. We offer different market access options depending on your needs: Energy Trader and our Direct Market Access (DMA). Energy Trader is a web-based portal featuring real, live best-of-the-book prices, routed directly from Trayport Joule. Customers have access to Vattenfall’s network of over 200 market participants. We offer our DMA directly within Trayport Joule. This gives customers full professional access to the futures market and allows them to expand their trading partners and increase their liquidity in the market. Both models stand out for their transparent processes, REMIT support, delivery to the customer’s own balancing group, and clear service fees.
 

Do you have questions about OTC trading? Feel free to contact us!

<a class="arrow">energysales@vattenfall.de</a>

Here you will find more information about our services: 

• Energy Trader
• Direct Market Access (DMA)

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