IEX kicks off member hunt

MUMBAI: Indian Energy Exchange (IEX) jointly promoted by Financial Technologies Group (FTIL) and Power Trading Corp (PTC) is likely to be operational by November. The company on Wednesday launched a drive to get members.

IEX hopes to tap the potential in short-term power trading, which would cover trading requirements within a timeframe of up to 25 years. Short-term trading currently 3% of the total power market in India, which is close to Rs 1.25 lakh crore. Globally the figure is between 30-40%.

“As the market evolves, short term power trading will increase and we think in the next five years it could be 20%-25%,” IEX director Joseph Massey said. With power being traded through the exchange, under-utilised capacity will be able to operate at optimal levels and new capacities will be added, he said.

Electronic trading will open access for any trader who consumes over a mega watt of power. IEX received approval from the Central Electricity Regulatory Commission (CERC) in August for power exchange that will be demutualised and established at Delhi.

“Many captive power plants do not produce electricity, as they do not have a market mechanism to operate. Through the exchange, they would get a price signal without having to identify the buyer,” Mr Massey said. The exchange will start with daily delivery based transactions and gradually long term contracts will be launched followed by futures for which regulatory nod has been received by the FMC.

The other strategic joint equity partners of IEX are Adani, IDFC, Lanco Infratech, REC, Reliance Energy and Tata Power.
The exchange will allow surplus regions and players to trade their power at optimal prices, with buyers at a national level. All prices and quantities will be displayed on IEX trading terminals across India.

The membership admission fee for the exchange would be Rs 25 lakh with a deposit of Rs 25 lakh and an annual subscription of Rs 5 lakh. The prospective members includes inter-state generating stations (ISGSs), distribution licensees, state generating stations, independent power producers (IPPs), CPPs, electricity traders, large capitalised corporate traders who may trade for other large clients and open access customers.

Financial Technologies has also tied up with OMX technology who are the technology provider for the world’s leading power exchange (Nordpool). Financial Technologies and OMX will together provide technology support to IEX.