VILNIUS - Lietuvos Energijos Gamyba, a company working in the production and wholesale trade of electricity, continues pursuit of its goal to help the integration of the Nordic and Baltic electricity markets, reports ELTA. It is also the first Lithuanian company to join the derivatives exchange through a NASDAQ OMX Commodities listing.
NASDAQ OMX Commodities offers market participants the possibility to trade derivatives linked to the price of electricity on the Nord Pool Spot power exchange. The trading of derivatives, despite the bad reputation they have received due to the global financial crisis, actually helps companies to manage the risk, through hedging, of power price fluctuations.
The NASDAQ OMX Commodities desk, which currently offers products linked to electricity prices in the Nordics and Estonia, is also considering launching derivatives linked to electricity prices in the Latvian and Lithuanian bidding areas.
By cooperating with other energy companies and transmission system operators of Baltic States as well as NASDAQ OMX, Lietuvos Energijos Gamyba seeks to contribute to the development of a liquid electricity derivatives market. “Developing [the liquidity] in the electricity derivatives market will not only enable market participants to hedge against fluctuations of power prices on the Nord Pool Spot power exchange, but also will let anyone publicly see the aggregated expectations of market players about the future power prices,” said Vidmantas Salietis, head of the Wholesale Electricity Department of Lietuvos Energijos Gamyba.
The company views joining NASDAQ OMX Commodities as a strategic move showing both the importance of NASDAQ OMX in the establishment of a well-functioning regional power market in the Baltics, as well as the determination of Lietuvos Energijos Gamyba to become an active member.
The development of a properly functioning and integrated energy market and the creation of the necessary energy infrastructure which would ensure that the created regional energy market is competitive, sustainable and secure, is the key objective of the Baltic Energy Market Interconnection Plan (BEMIP). According to this plan, the development of a fully-functioning integrated electricity market requires a derivatives market that would help market participants to manage the risk of price fluctuations of power prices.