The European Energy Exchange will start derivatives trading in...

The European Energy Exchange will start derivatives trading in electricity, probably before the end of the year, exchange board members Christian Geyer and Hans E. Schweickardt said in a news release. The underlying instruments will be base-load and peak-load blocks traded on the spot market at the exchange. Currently, 25 participants trade an average of about 100,000 megawatt hours of electricity each week on the exchange’s spot market. Electrical derivatives contracts will have terms of one to 18 months and will be settled in cash. Exchange officials expect 5% of the total German electrical consumption to be traded through the exchange near-term, and ultimately as much as 20%. Training for electrical derivatives market participants began in late September. Market simulations are set to begin this month and last for three weeks. A launch date has not been set.