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Deal 5: EXAA CEO Jurgen Wahl on Restructuring Clearing of Spot Market Trading on Vienna Commodity Exchange

Deal 5: EXAA CEO Jurgen Wahl on Restructuring Clearing of Spot Market Trading on Vienna Commodity Exchange

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On November 12, 2021, CEE Legal Matters reported that Cerha Hempel had advised Energy Exchange Austria and its cooperation with CCP Austria on the restructuring of the clearing of spot market trading in electric power products on the Vienna Stock Exchange and on the transfer of the central counterparty function from EXAA to CCP Austria. CEE In-House Matters spoke with Jurgen Wahl, CEO at EXAA, to learn more about the matter.

CEEIHM: To start, tell us about Energy Exchange Austria and about its cooperation with CCP Austria.

Wahl: Since 2002 Energy Exchange Austria, is Austria's leading energy exchange for spot market energy products with numerous domestic and international customers and offering a cross-border product portfolio. As a power exchange and nominated electricity market operator (NEMO), we offer on behalf of Vienna Stock Exchange market participants neutral and non-discriminatory access to the uniform European Single Day-Ahead Market Coupling Auction as well as access to EXAAs unique local auction in Austria and Germany plus a green market auction. We thereby guarantee fair price discovery in line with market practices and as a competence center and knowledge transfer agent, we additionally provide our know-how on the energy market through training courses and consulting projects.

To continue to grow sustainably as an attractive partner for all players in the European Energy Market, EXAA continuously strives to leverage innovation potential. On November 9, 2021 EXAA, therefore, outsourced its clearing and risk management to CCP Austria, which provides modern, safe, and efficient state-of-the-art clearing and risk management services for the energy market. Market participants benefit from risk reduction and efficient margin requirements as well as from a modern service package. Together with CCP Austria, EXAA, and CCP Austria are well prepared for the further development of the European internal market for electricity.

CEEIHM: As CEELM reported, Cerha Hempel advised Energy Exchange Austria and its cooperation with CCP Austria on the restructuring of the clearing of spot market trading in electric power products on the Vienna Stock Exchange. What did this restructuring entail exactly and why was it needed?

Wahl: Clearing and settlement is an essential part of the execution of bids/orders and auctions at an exchange and is regulatory, financially, and, above all, technically challenging.

Therefore, the assignment of CCP Austria and the outsourcing of the clearing and settlement tasks was a correspondingly sensitive and intensive project, which was successfully completed by a large part of the internal teams of EXAA and CCP.A, and active support of numerous external partners. In addition to the challenge of expanding the activities and services of CCP.A in accordance with EMIR Regulation No 648/2012 and the complete establishment of energy clearing and settlement at CCP.A in accordance with CACM Regulation No 2015/1222, including considerable financial and technical requirements and bilateral agreements, EXAA had to prepare this restructuring and transfer in parallel in accordance with the provisions of the Stock Exchange Act and CACM as well. It was necessary for EXAA to adopt a large number of contracts with partners and all contracts with customers, further it was required to completely revise EXAAs general terms and conditions and the rules and regulations for both auctions.

CEEIHM: According to the firm, "considerable adjustments [were] required as a result of changes to the settlement structure in the Austrian electricity trading spot market." What were the most challenging changes from a legal perspective?

Wahl: We operate in a highly regulated area and the requirements were equally high. This included extensive cooperation with numerous governmental authorities from the perspective of the stock exchange, energy, and financial law and, in addition to the timely conclusion of a large number of private law contracts with partners but also especially all our customers, certainly represented the greatest legal challenge. In particular, the exact coordination of external and internal processes, service providers, contractual partners, and authorities was challenging – after all, clearing and settlement had to be precisely converted from one day to the next. Thanks to the intensive efforts of our teams, but also especially to the efficient cooperation with the various regulatory authorities, we were able to successfully complete the project in time.

CEEIHM: How did you split the legal work between your in-house function and your external advisors?

Wahl: The time constraints for a project of such size and complexity were very challenging. Thanks to many years of cooperation and trust, we were able to manage the workload with all parties involved to successfully meet the envisaged milestones and targets. 

CEEIHM: And why did you pick Cerha Hempel as your counsel on this matter?

Wahl: Cerha Hempel's Banking & Finance Partner Peter Knobl is a well-renowned expert and he has been supporting EXAA for many years with regards to the stock exchange law and the relevant regulations (MiFID II, EMIR, REMIT, CACM-VO). Due to the long-standing cooperation and high expertise of Knobl, we didn’t hesitate to enlist his support for this project as well and were very pleased with our cooperation and substantial inputs.

Originally reported by CEE In-House Matters.

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