EEX & Nasdaq Cancel Nordic Power Deal Amid Competition Concerns

The European Energy Exchange (EEX) and Nasdaq have cancelled their planned Nordic power trading and clearing business deal. The deal faced scrutiny from Nordic authorities over market competition concerns. Both companies will continue their operations independently, leaving the Nordic power market's future uncertain. Market participants are concerned about the implications.

Exchanges Nasdaq and the European Energy Exchange (EEX), Europe's biggest power bourse, said on Wednesday they have cancelled plans under which the EEX would have purchased Nasdaq's Nordic power trading and clearing business.

The deal would have increased EEX's dominance in the European power trading sector even further. Although the deal, which was announced last year, did not meet the standard threshold requirements for an EU anti-trust investigation, some authorities in Nordic member states requested that the EU Commission take a closer look at the case on concerns it could hamper market competition.

A preliminary review of that was scheduled to end Wednesday. According to a commission document, concerns were around whether the deal would allow EEX to bundle its products to expand its market share and potentially spike power prices.

At present, EEX and Nasdaq Commodities, are the only providers of exchange-based Nordic Power trading and clearing. EEX said it will continue to pursue its own business strategy for the region and related markets independently, without providing any reason for the deal termination.

Nasdaq said it will continue to operate its Nordic power trading and clearing business. Last year, the EEX and Nasdaq said the deal posed no significant threat to competition in the Nordics or EU, nor would it eliminate competition between the two companies.

Some market participants were concerned about the cancellation of the deal. "The Association of Nordic Energy Traders (NAET) is concerned that this (cancellation) will bring added uncertainty going forward," its chairman Trond Strom told Reuters.

While there is some downside to competition from having one dominant exchange, trading venues are "natural" monopolies where liquidity follows liquidity, he added. However, recent Nasdaq rule changes opened up the possibility to close down the clearing house for business reasons and raised questions over the future of Nordic power trading on exchanges, Strom said.

"I am certain that the Nordic market will persist, but if Nasdaq wants to leave the market everyone will benefit from that exit being managed in an orderly fashion," he added. A total of 449.1 terawatt hours (TWh) of financial power contracts were traded and cleared on Nasdaq Commodities in 2023, of which 446.8 TWh were Nordic contracts and the remainder German power futures, according to the exchange.

This compares with 12.6 TWh of Nordic contracts traded on the EEX. Liquidity in the Nordic financial power market has been under pressure as trading has shifted to short-term spot contracts or bilateral deals due to growing price differences in the region.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)