KELER CCP’s central counterparty activity, Part II.


As the sole central counterparty in Hungary, and the first in the region to receive its EMIR licence, KELER CCP Ltd. has been playing a prominent role in the European and regional capital and energy markets for more than two decades and for more than 8 years respectively. The clearing and guarantee undertaking services provided ensured that KELER CCP has been following a path of continuous development, primarily due to the growth of the energy market, but the capital market clearing services offered by KELER CCP also contributed to the sustainable growth of the company.


The strategic goal of KELER CCP is to act as a central, regional clearing service provider by relying on the clearing house expertise acquired in the past years. KELER CCP provides services in the capital and gas markets as a central counterparty, and since 2010, it has been providing general clearing member services in the energy markets cleared by European Commodity Clearing (ECC), Germany.


Looking at the figures, in the first three quarters of 2018, KELER CCP realized an outstanding profit before tax of HUF 183 million, which is 134% of the planned amount for the entire year, and is very close to the year-end figure of 2017 (HUF 190 million). Income from central counterparty activity was 9.2% higher than in the same period of last year, and amounted to HUF 1 014 million. Income from non-core activity totalled HUF 85.9 million.


In the third quarter of 2018, KELER CCP had 135 clearing and non-clearing members from 23 countries, out of which 28 were capital market clearing members, 44 were gas market clearing members, and 76 were energy market non-clearing members.


As central counterparty (CCP), KELER CCP performs clearing on the following trading platforms:

  • Budapest Stock Exchange
  • BÉTa market
  • Xtend market
  • MTS Hungary
  • Trading Platform
  • CEEGEX
  • HUDEX / Gas segment

 

As central counterparty, KELER CCP acts as buyer towards all sellers and acts as seller towards all buyers regarding the trades concluded on the markets above stated, thus eliminating the arising counterparty risk through the novation of the trade. KELER CCP undertakes guarantee for the positions arising from novation.


As a result of the Network Code implementation, the clearing of balancing positions and trading platform transactions were completely separated last year. Other milestones reached last year include the successful authorization of KELER CCP by the competent authority (MNB), and the fact that the complex risk management and clearing system of the company was prepared for Xtend, a trading venue launched by the BSE in the autumn of 2017 and designed to assist small and medium enterprise listings.


Brexit, the impending exit of the United Kingdom from the European Union does not pose any threat to the operation of KELER CCP. Currently, the exit could have an impact on the clearing service provided to MTS Hungary, operated by EuroMTS Ltd. registered in the United Kingdom. However, we understand that MTS is taking steps to ensure its activities can be continued without disruption after the exit also; as a result the MTS Group relocates to Italy. KELER CCP and MTS S.p.A. already signed the necessary contract to facilitate this move as of 1 March, 2019.


In the first three quarters of 2018, multinet cash securities market fee income consisted of HUF 39.6 million membership fees, while transaction clearing fees amounted to HUF 222.1 million. KELER CCP realized HUF 144 million derivative market turnover clearing fee income, and membership fees generated an income of HUF 20.7 million. In Q1-Q3 of 2018, CEEGEX/HUDEX and the Trading Platform markets generated turnover income HUF 38 million and HUF 57.4 million respectively for KELER CCP, and the amount of membership fees was nearly HUF 71 million on the Trading Platform market and more than HUF 32 million on CEEGEX/HUDEX. The change from HUF-based trading, clearing and settlement to Euro-based trading, clearing and settlement and the start of continuous trading were major achievements in the operation of the CEEGEX and HUDEX gas exchanges in 2018.