Company Report: APX-ENDEX
Leading power & gas exchange services We profile Europe’s premier provider of power and gas exchange services for the wholesale market

Bert den Ouden, CEO

Making markets work

Monitoring data

When you think of APX-ENDEX, you think of a top class operator in the provision of power and gas exchange services. In fact, the company is Europe’s premier provider in the field, providing transparent markets for the short-term, and with the acquisition of ENDEX in December 2008, futures trading in the Netherlands, the UK and Belgium. Established in 1999, APX-ENDEX offers trading and clearing services for power and natural gas on spot and futures markets. APX-ENDEX also provides market data and a range of indices for use by traders, energy suppliers and energy-intensive industries.

INTEGRATION OF THE GAS MARKETS
APX-ENDEX is working on integration of the gas markets, for instance, by means of re-trading of gas transportation capacity. Based on its position as the most experienced gas spot market in Europe, APX-ENDEX aims at creating an integrated gas market for Europe.

It is a formidable operation. The firm provides exchange trading, central clearing and settlement and data distribution services. It has over 300 memberships from over 15 countries. The firm offers benchmark data and provides industry indices, with offices located in Amsterdam, London and Nottingham.

From its inception, the company added derivatives to the projects, and instead of only electricity, it now does gas as well. “So we have branched out in three dimensions from derivatives, more commodities, gas in particular and, of course, more international,” says CEO Bert den Ouden.

The company has also been fortunate enough to have grown its trade in the recession. “That’s right, by 26 percent in volume,” says den Ouden. “We were profitable over the last year, although less than the year before, but that’s due to the integration between the stock market change and the derivative change which took place at the end of 2008,” he continues.

The financial crisis has, in a way, contributed to the growth. This is because APX-ENDEX also provides clearing of contracts and OTC contracts which are concluded outside of the exchange. And, at such a time of financial turmoil, this is attractive for parties to give up those contracts for clearing by financial institutions.

THREE TYPES OF PROJECT
The projects on the table for the firm are in three categories. Firstly, the further integration of the electricity market. From 2005 on, the firm has had a focus on projects that create coordinated order matching between the electricity exchanges in Europe.

As Europe moves closer towards realising the EU vision of an integrated internal market, APX-ENDEX actively works together with other exchanges and Transmission System Operators (TSO) in neighbouring countries to provide integrated trading, such as the “market coupling” concept (www.apxendex.com). Therefore, at the end of 2006, the firm established a coordinated shift called Market Coupling between The Netherlands, Belgium, and France.

The process minimises the price differences between the countries, and optimises the power flow. “That’s been extremely successful because that generates much more liquidity in all of the countries involved,” says den Ouden. “Since then, we’ve been taking a new project, Central Western European Market Coupling, which is with those three countries and also Germany and Luxembourg, to influence the same idea into a wider region.”

APX-ENDEX is also strongly involved with the development of a cable between The Netherlands and the UK, BritNed. A cable of about 1000 MW is currently being constructed and is due to be finalised in 2011.

The ‘market coupling’ between the two power markets, Dutch and the UK markets, will link these two electricity markets together. “We will keep doing this also towards the Scandinavian region,” says den Ouden. There is already a 700 MW cable between The Netherlands.

Altogether, it is quite a portfolio of very intensive projects that generate a lot of liquidity - and that is just in the integration of the electricity market. The second category is gas, and last year was the first year that APX-ENDEX had more in volume of gas than it had in power. “So gas is really the fastest growing part of our portfolio,” says den Ouden. The UK market has seen growth in gas and Belgium and the Netherlands are the future.

Thirdly, APX-ENDEX works on the improvement of the company’s current portfolio. One of the indicators of the successful work is seen on the growing yearly volumes – 26 percent in 2009 from the previous year across the markets.

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