TTF just as attractive as the NBP

28 Jul 2011

The attractiveness of a gas trading exchange (hub) is not merely determined by its size, but also by the ease with which it facilitates gas trading. There are various different ways of measuring this ease of gas trading, for example the churn (how often a particular volume of gas is traded, on average) or the price spread (the difference between the purchase price and the selling price).
The English gas trading exchange, the NBP, is by far the largest in Europe and our TTF follows in second place in terms of traded volume (and is still continuing to grow). However, the rating of the TTF has risen so sharply that this now stands at the same level as that of the NBP for the first time. This is based on the findings of the so-called ICIS Heren Tradability Index*), which measures the tradability of a number of gas products offered on hubs (on the basis of the difference between purchase price and selling price). The smaller the price difference between buying and selling, the easier it is for a trader to find a counterparty to carry out a transaction on a hub.
This is not only good news for the TTF, but also for the Dutch balancing regime, as the last point the TTF scored was for the increased tradeability of within-day products. According to Heren, the new balancing regime contributed towards the creation of a within-day market.

The other continental European hubs (PEG, NCG, Zeebrugge, Gaspool, CEGH and PSV) have a considerably lower Tradability Index value.

*) Ten products are taken into account. Where the spread is < 0.3 €ct/m3, this earns a score of 2 points; where the spread is < 0.5 €ct/m3 this remains at 1 point; otherwise 0 points.