Nodal Exchange offers futures contracts for on-peak and off-peak power contracts at commercially significant hubs, zones and nodes in the following organized electric markets: ISO-NE, NYISO, PJM, MISO, ERCOT, and CAISO. As other regions in the United States and Canada move to a nodal market structure, Nodal Exchange will extend its platform to these market regions. Nodal Exchange also offers a Henry Hub natural gas contract.
Benefits of Nodal Exchange
Nodal Exchange offers over 1,000 contracts on hundreds of unique locations in the RTO/ISO markets. Nodal Exchange has the flexibility to quickly introduce additional locations as needed by Participants. Nodal Exchange power contracts are all offered in 1MW lot sizes to give participants the ability to tailor their futures positions to their actual needs.
Nodal Exchange contracts trade on Nodal LiveTrade, a central limit order book with a trading screen interface. Order types can include: outright power or natural gas at a location, locational spreads between two nodes, Day Ahead / Real Time power settlement spreads (DART), and aggregate time periods (strips). For additional flexibility, Nodal Exchange also offers Nodal BlockTrade, a service for clearing block trades for both power and natural gas.
Credit Risk Management
One of the major advantages Nodal Exchange offers to its Participants is the full clearing of all trades through its Central Counterparty (CCP): LCH.Clearnet. LCH.Clearnet is the leading independent clearing house, serving major international exchanges and platforms, as well as a range of OTC markets. With its broad reach, experience, and large capital base, LCH.Clearnet allows Nodal Exchange Participants to concentrate on the market itself rather than on counterparty or credit risks. LCH.Clearnet is a derivatives clearing organization (DCO) registered with the U.S. Commodity Futures Trading Commission (CFTC).
Nodal Exchange provides effective risk management and superior capital efficiency through the use of portfolio Value-at-Risk (VaR) margining offered by LCH.Clearnet. This robust and effective approach to margining, which accounts for the correlations between many different contracts, even across ISOs and different commodities (e.g., power and gas), results in greater capital efficiency for Nodal Exchange Participants.
Price Discovery and Market Liquidity
Nodal Exchange provides superior price discovery and market transparency. Daily marks are provided to Participants on approximately 50,000 expiries.
Nodal Exchange's business model allows for the rapid introduction of additional products. Nodal Exchange has the flexibility to add granular locations as needed by Participants. Nodal Exchange, with LCH.Clearnet's support, works with market Participants to develop products that best meet the needs of the market.