On October 1 2016, new gas balancing schemes were rolled out in Italy and Spain to align the two countries’ gas hubs with European standards.
Following the first month of implementation, liquidity seems to have been effected in different ways, with the Italian PSV hub seeing a boost in OTC spot trading and the Spanish PVB gas hub seeing volumes picking up on the official exchange, the MIGAS platform.
New balancing scheme pushes OTC intraday volumes higher in Italy
Traders polled by S&P Global Platts said the new balancing setting in Italy has boosted liquidity on the within-day OTC market — many participants seem to prefer balancing their positions OTC so far.
Among other issues, participants pointed to a lack of integration between the balancing platforms run by GME (MGAS and PBGAS) with the main trading platforms used by traders. They also believe that the guarantee system required by GME is more expensive than the guarantees required by counterparties in OTC trading.
As for the role of
Snam, an Italy-based trader said “Snam [in its role as market maker on the balancing platforms] should take additional steps to enhance liquidity on the MI-GAS [intraday spot market] and on the MGP [storage balancing market],” referring to the lack of liquidity on those platforms. Snam is responsible for incentivizing participants to balance their portfolios in the new setting through the use of short-term standardized products trading and the use of balancing services.
In the MGAS, the title products are traded in the MGP day-ahead gas market and the MI-GAS intraday gas market. On the new PB-GAS platform, the location product market, known as MPL, replaced the G-1 session while the storage product market, named MGS, replaced the G+1 session.
Data released by GME provided evidence to support the shift of volumes from the exchange to OTC.
Gas traded on Italy’s gas exchange totaled 2.2 TWh in October following the implementation of the new MGAS and PBGAS regimes. This resulted in a steep fall of 50% from October 2015 when 4.4 TWh was traded on the exchange, according to GME data.
Nearly all of the volume traded in October were via the GME’s intraday spot market MI-GAS.
In the new MGS storage market, 537 GWh were exchanged. Of this volume, 415 GWh were traded directly among PBGAS participants while Snam offered ...
