Futurisation worries end-users of OTC energy derivatives

Regulation has caused much of the over-the-counter energy derivatives market to move to exchange-traded futures. While many market participants welcome the shift, derivatives end-users worry that it could harm their ability to hedge. Alexander Osipovich reports

It’s not often that sweeping transformations of key commodity markets take place overnight. But that’s effectively what happened on October 15, 2012, when some 800 energy swap contracts listed by Atlanta-based exchange operator Ice were converted to futures. On the same date, Chicago-based CME Group began allowing some 500 cleared energy swap contracts on its ClearPort platform to be executed as futures block trades – and by the time Energy Risk went to press, about 90% of energy trades on