EEX and LPX merge

Germany's two electricity exchanges, the European Energy Exchange (EEX) and the Leipzig Power Exchange (LPX), will merge by the start of next year. The new exchange will be called EEX, and will be based in Leipzig. It will be jointly run by Hans Schweickhardt, EEX's chief executive, and Carlhans Uhle, his counterpart at LPX. About 90 participants from nine countries will trade at the new EEX, which will aim to attract new traders to Europe’s recently liberalised energy markets.

The rival exchanges said on Friday that the move was a "merger of equals", although existing shareholders in the Deutsche Börse affiliate EEX will hold 57.5% of the merged exchange.

The LPX, backed by power exchange Nord Pool, launched Germany's first spot bourse in June last year, just ahead of a similar move by its Frankfurt-based rival, EEX. On both spot markets around 90,000 MWh are traded per day - representing approximately 6.6% of the power sold in Germany.

Because of the merger, the LPX will not go ahead with plans to launch its own futures contract, which it scheduled to introduce this year. Both the LPX Sapri and EEX Xetra trading systems will be used.

The merger ends months of speculation about a move that many observers had considered a natural progression, with industry players and analysts insisting there was only room for one exchange. The move will also allow the new exchange to focus on other markets. "We want to use the synergies we realise with the merger for establishing new markets and services," Schweickardt said.

Last week, US-owned Entergy-Koch Trading (EKT), a joint venture between Entergy Corporation and Koch Industries, said it was boosting its European electricity and weather trading business with expansion in Germany and the Netherlands. EKT, which in August changed its name from Axia, started trading electricity through over-the-counter derivatives in Germany in February this year. But EKT chose to trade on the LPX, rather than EEX, after studying liquidity on the two bourses.

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