my understanding of market coupling is bids from various exchanges will be matched to find the best price, what I fail to understand is how market depth will be shown on each exchange cumulatively.
So even if implemented price discovery can improve but what will make people to ditch IEX and try something else? if its cost of trading then IEX can always match or even go below competition if required, right?
HPX gets CERC approval for high price contracts.
I think with market coupling the existing exchanges will become somewhat like brokers. I am not sure though how things will pan out.
Hi Sachin, Everyone,
Any idea when is IEX Q1 FY24 earnings conference call scheduled? Typically concalls happen within couple of days. Has it happened already for IEX?
Thanks,
Kapil
you will find the link for the conference call recording (1QFY24) hereâŚ
being a broker is of little use. someone has to stand behind the contract as counterparty. IEX will do that. simply becoming a broker is pointless. it wont work. trades are being done every day /hour so brokers cant handle the confirmation and guranteee
CERC Staff paper on market coupling is out
Very informative
https://cercind.gov.in/2023/Approach_paper/Staff%20Paper_Market%20Coupling-%20Final%20(21-8-2023).pdf
Looking at speed at which things are moving at CERC level, it wonât be long. But it doesnât matter. Stock wonât move until market coupling is implemented. Itâs not when and not if.
To be discussed is what will happen to exchanges. There wonât be need of 3 exchanges. May be they will merge. It needs to be seen what role European Power exchanges play under Price Coupled market.
Indeed, lot of interesting and transparent debate. One specific point in this staff paper on market coupling that catches attention is as follows:
"5.2.4. Given the existing market share of power exchanges in the collective
transaction segment, it seems that while the implementation of market coupling
may not cause any major change in terms of price discovery, the bids could be
divided among the exchanges, which at present are concentrated in one
exchange. "
Doesnât this mean that irrespective of market coupling, IEX would continue to enjoy the dominant position since, due to high liquidity, the optimum prices would mostly be discovered on IEX?
I have 2 basic doubts with respect to the market coupling mechanism in the context of above point:
- Can the actual power transaction be executed on any exchange irrespective of which exchange the best price was discovered on? So, say the discovered price happened to be quoted on IEX, can the transaction still happen on HPX or PXIL?
- From whoâs perspective is the best price defined? Sellerâs? Buyerâs? Governmentâs? End customerâs? Industryâs? A corollary to this question is: Say if the bid with the best price from sellerâs perspective is offered on Power Exchange A, but the best bid from buyerâs perspective on Power Exchange B, will the final transaction happen on A or B or some other common platform or will there be 2 transactions?
Request the experts to kindly throw some colors. Sorry, if the question is a mistaken interpretation of concept itself.
The answer to your first question is not clear yet. If all the bids are collated by the existing exchanges and the transaction gets executed on one of the existing exchanges, that setup would be a major fillip to IEX. This setup will let IEX add value in terms of novel products and itâs monopoly status is not under a grave threat.
In case of the alternative, which is what seems to be proposed in one of CERC circular, the existing exchanges will get reduced to brokers. All trades will be executed on the central coupling platform.
My vague thoughts are, If the govtâs intent is not to have the monopoly status continue(for whatever reason) they will have a new coupling operator. The existing market coupling circular also seems to have been pressurized by one of the govt entities that benefits from IEX not having itâs monopoly status. They may have had a win at that but convincing the govt to implement things at a larger scale is nowhere this easy.
If the govtâs intent is to have MBED but doesnât want to own up the complexity of implementing a coupling operator, that would mean the existing exchanges will still remain exchanges and all the bids from all exchanges will be collated and be visible on all of them. This setup would be the best thing for IEX investors.
I personally feel, if the govt really wants to have itâs own coupling operator, thatâs a big undertaking and will only delay MBED and status quo will continue. Keeping interest of the sector in mind, a faster execution of MBED and coupling operator would be to let the existing exchanges collate bids. I would like to be believe this is what will happen but alas.
Disc: Not invested, but tracking closely.
Wondering whether exchanges can develop mechanism themselves to show cumulative bids?
PTC India introduced the concept of Electricity Trading in India and co-promoted IEX.
Later it divested its entire stake in IEX.
Thereafter, It co-promoted another exchange - HPX and we can guess âŚsooner or later it will divest its stake in it.
No price for guessing who will most likely own the market coupling agency.
What is not good for IEX will also be not good for HPX.
In this great game being played out by PTC India do we know where the real cheese is moving ?
IEX stock price shooting with heavy volume today and stock reaching 200 week MA from lower levels. Is there any news flow?
Exchanges can develop mechanism themselves, but that could lead to issues without a central collation of bids as one exchange can manipulate the inclusion/exclusion of bids from other exchanges.
Coming to think of it now, implementing a market coupling operator may not really be a huge undertaking, I think I was wrong here. Reasons being, the exchanges which are for the implementation of a market coupling operator are backed by exchanges like BSE, NSE and these guys know how to build a robust exchange, help is at hand. And also given the volumes of IEX, itâs probably a fraction of what happens in NSE/BSE, so tech wise it is more forgiving.
Agree, i donât think this is about coupling at all. i think the government may have some axe with 63 Moons being the main player in IEX and are trying to clip their wings⌠Exchange business is highly political and motivated and they hate new players, and IEX was thrown out of MCX and now they are trying to push it out of Energy. this platform is way ahead of others and coupling is hardly going to affect it. trades are done at micro secs and IEX will be able to match the rates within their own platform to bypass coupling at the same time the price gets published
The long-awaited GNA regulation is finally implemented.
This will boost DAM volumes traded on IEX.
Before this there was a regulatory arbitrage which has led to a temporary shift of volume from Day-Ahead-Market (DAM) to Day-ahead Contingency (DAC).
Now it wonât be the case anymore.
Overall positive for IEX.
Disclosure: Invested, biased.
Indian Energy Exchange to acquire 10% in Enviro Enablers India Pvt Ltd (EEIPL)
Under this agreement, IEX will acquire a 10 per cent stake in EEIPL through Compulsory Convertible Preference Shares (CCPS). This strategic move aligns with IEXâs commitment to sustainability and decarbonisation, in accordance with Indiaâs net-zero commitments and to promote a circular economy, the company stated in a press release.
What does Enviro Enablers India Pvt Ltd (EEIPL) do?
EEIPL incorporated incorporated on 21st October 2021 is engaged in the business of waste management by collection, segregation, processing and transportation of dry waste, plastic waste, and all categories of waste including but not limited to organic waste, expired FMCG waste, electronic waste, construction and demolition waste, hazardous waste, agro waste, tyre waste, solar PV module waste and end of life vehicles waste, and proposes to develop and operate a digital Material Waste Platform which would connect industry participants in the waste management process.
Comments from IEX Management: Mr. SN Goel, Chairman and Managing Director of IEX
IEX is proud to associate with Enviro Enablers and to partner in this circular economy platform. This partnership reaffirms our steadfast commitment to sustainability and decarbonisation, aligning seamlessly with Indiaâs net-zero goals. The platform will catalyse solutions for compliant waste management, including segregation, processing, recycling, tracking, tracing, and valorisation of waste fractions, all while uplifting informal waste pickers."
Source: https://www.bseindia.com/xml-data/corpfiling/AttachLive/dd7394c8-d3ba-43cd-8dc8-d02d4d351c63.pdf
IEX has achieved a pivotal milestone in shaping the future of power trading in India. With the introduction of the High Price Segment, the power market becomes more dynamic, fostering greater inclusivity and competition. This development is expected to have a significant impact on the nationâs energy landscape.
Please read the document below for more details.