PVB products indexed to the TTF ICIS Day Ahead
PVB-TTF natural gas futures products are contracts referenced to the Title Transfer Facility (TTF) or Dutch virtual balancing point with the following characteristics:
- They are products with physical delivery of the gas in the Spanish PVB and non-financial, whose price is referenced TTF-Day Ahead, plus a differential (spread) resulting from matching.
- They have different delivery periods (rest of month, monthly, quarterly, half-yearly, annual).
- They can be traded on the MIBGAS platform or registered as bilateral OTC contracts. They can also be traded from Trayport (code: PVB MIBG TTF ICIS Index).
- Clearing and settlement is handled by the OMIClear clearing house.
Trading
The purchase and sale orders that MIBGAS Derivatives agents send to the trading platform for these products will have a price equal to the spread with respect to the price of the TTF at which they want to buy or sell gas with delivery in PVB.
This spread is the one that is traded on screen. Thus, orders to buy and sell a quantity of gas are accompanied by a price spread. For example, when a buyer attacks a sell order with a certain spread, the matched spread of the sell order is added to the Dutch TTF price on the day the gas is delivered (specifically the ICIS TTF Price Assesment Day Ahead price) for settlement.
Settlement
The TTF-indexed PVB product is settled each delivery day at the TTF Day Ahead price published by ICIS on that day, plus the spread negotiated on the MIBGAS screen.
The price used as TTF Day Ahead is the price published as TTF Price Assessment Day-Ahead by ICIS in the European Spot Gas Market publication.
Advantages in risk management
This product allows the complex risk management of brokers to be carried out by simplifying multiple hedging transactions into a single operation. The physical product replicates identically in terms of settlement the strategy that brokers use today to hedge in TTF without having to trade on multiple exchanges.
MIBGAS Derivatives' TTF-indexed PVB product allows brokers to avoid unwinding the TTF position and replicate the index at the same time using the spread they have deemed appropriate to adjust the TTF assessment to the particularities of the Spanish PVB.
To trade the PVB product indexed to TTF it is necessary to be registered in MIGBAS Derivatives and OMIClear.
The process to register in MIBGAS Derivatives is very simple and, as in MIBGAS, Agents may participate in the market directly or through a representative. In the latter case, representatives who are not Agents must register as Representative Entities.