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ICE to Launch European LNG Futures for North-West and South-West Europe and Three Supporting French, German and Italian Natural Gas Futures
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Rhea-AI Summary
Intercontinental Exchange (ICE) plans to introduce two new liquid natural gas (LNG) futures contracts for North-West and South-West Europe, launching on December 5 pending regulatory approval. These contracts aim to facilitate trading and hedging of LNG price differences compared to pipeline natural gas in Europe. They will be cash settled based on Spark Commodities’ price assessments, priced in USD per MMBtu. Additionally, ICE is set to launch three supporting natural gas contracts on the same date, enhancing flexibility for managing LNG exposure.
Positive
Introduction of two new LNG futures contracts will enhance trading options.
Contracts designed to manage price differences between LNG and pipeline gas are timely amid Europe's energy crisis.
Upcoming contracts will increase the choice of pricing tools for market participants.
Negative
High natural gas prices in Europe due to supply-demand imbalance, particularly from reduced Russian supply, may affect liquidity.
Dependence on regulatory approval could delay contract launch.
LONDON--(BUSINESS WIRE)--
Intercontinental Exchange, Inc. (NYSE: ICE), a leading global provider of data, technology, and market infrastructure, today announced plans to launch two liquid natural gas (LNG) futures contracts for North-West Europe and South-West Europe.
The contracts are designed to help market participants trade and hedge the difference in price between LNG for delivery in North-West and South-West Europe, versus natural gas provided by pipeline to Europe, as well as LNG across the rest of the world.
The contracts will be cash settled based on Spark Commodities’ price assessments for LNG cargos and priced in USD per MMBTu in line with ICE’s existing LNG contracts. The contracts are due to launch on December 5, subject to regulatory approval.
“Reflecting the energy situation which exists within Europe today, customers need a futures contract to price LNG imports into Europe, and provide a means to manage the difference with the price of natural gas delivered via pipeline,” said Gordon Bennett, Managing Director of Utility Markets at ICE. “The price of natural gas in Europe remains high because of an imbalance between supply and demand, caused by the significant reduction in the supply of natural gas into Europe from Russia and the downstream impact of physical capacity constraints across the European natural gas network.”
“Futures markets are providing important price signals to identify the location of these bottlenecks, allowing for capital to be allocated efficiently to address them by adding, for example, regasification capacity to import more LNG,” continued Gordon Bennett. “Futures markets are also a key risk transfer mechanism to reduce exposure to spot markets and thus a critical avenue for energy firms to manage their risk so they can maintain a stable source of energy to European societies. We continue to work closely with our customers, regulators and governments to find market-based solutions to the pressures caused by the energy crisis and ICE is ready to assist with developing an EU futures market based on the complementary LNG benchmark to be developed by the EU Agency for the Cooperation of Energy Regulators (ACER).”
Additionally, ICE plans to launch three supporting French PEG, German THE and Italian PSV Natural Gas 1st Line contracts on December 5, subject to regulatory approval. The cash settled contracts will trade and settle in USD per MMBTu and provide market participants with additional flexibility to manage their LNG import exposure. ICE already offers physically delivered PEG, THE and PSV futures which are priced in Euros per megawatt hour.
ICE is home to the natural gas benchmark TTF, a physically delivered contract which upon expiry results in natural gas being added to, or taken from, the TTF natural gas hub via title transfer. TTF trades from ICE in Amsterdam, producing a daily settlement price based on transactions of customers physically buying and selling natural gas and is the world’s second most liquid natural gas contract after the U.S.-based Henry Hub.
TTF and the new North-West Europe LNG futures are complemented by ICE’s existing German, Italian, French and Austrian natural gas futures and together with the new South-West Europe LNG futures, which add coverage of Iberia and the Mediterranean, will increase the choice of pricing and risk management tools available to market participants.
The five futures contracts will trade from ICE Futures Europe and clear at ICE Clear Europe alongside global energy benchmarks including Brent Crude, TTF natural gas, European Carbon Allowances, Coal and Electricity, offering meaningful margin offsets across energy portfolios to maximize liquidity and capital efficiency.
The new contracts will form part of ICE’s global natural gas portfolio alongside the existing TTF, NBP, Henry Hub, JKM LNG (Platts), WIM LNG (Platts) futures, and the Spark30S Atlantic and Spark25S Pacific LNG freight futures.
About Intercontinental Exchange
Intercontinental Exchange, Inc.(NYSE: ICE) is a Fortune 500 company that designs, builds and operates digital networks to connect people to opportunity. We provide financial technology and data services across major asset classes that offer our customers access to mission-critical workflow tools that increase transparency and operational efficiencies. We operate exchanges, including the New York Stock Exchange, and clearing houses that help people invest, raise capital and manage risk across multiple asset classes. Our comprehensive fixed income data services and execution capabilities provide information, analytics and platforms that help our customers capitalize on opportunities and operate more efficiently. At ICE Mortgage Technology, we are transforming and digitizing the U.S. residential mortgage process, from consumer engagement through loan registration. Together, we transform, streamline and automate industries to connect our customers to opportunity.
Trademarks of ICE and/or its affiliates include Intercontinental Exchange, ICE, ICE block design, NYSE and New York Stock Exchange. Information regarding additional trademarks and intellectual property rights of Intercontinental Exchange, Inc. and/or its affiliates is located here. Key Information Documents for certain products covered by the EU Packaged Retail and Insurance-based Investment Products Regulation can be accessed on the relevant exchange website under the heading “Key Information Documents (KIDS).”
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 -- Statements in this press release regarding ICE's business that are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of additional risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see ICE's Securities and Exchange Commission (SEC) filings, including, but not limited to, the risk factors in ICE's Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC on February 3, 2022.
