Natural Gas Exchange for Futures for Swaps (EFS)

Flett Exchange Electronic EFS Platform Helps Hedgers and Market-Makers

efs — Wed, 09 Apr 2008 19:23:29 +0000

Flett Exchange, LLCs’ EFS platform was designed by members of the group who pioneered EFS trading in Natural Gas Futures, Flett Futures, Inc. Flett Futures, Inc led the way with EFS trading starting in 2002 while performing arbitrage between the NYMEX Henry Hub contract on the Floor and the ICE Henry Hub electronic Swap. We have witnessed the evolution of screen to pit arbitrage to pure electronic arbitrage. Along with this transition the EFS opportunity has moved further out on the curve. What has remained consistent is the need for counterparties to offset positions with each other. This can be done on the Flett Exchange Screen, via voice broker or direct between parties.

The Flett Exchange electronic screen provides the transparency demanded by hedgers and market-makers alike. This screen can handle thousands of transactions per day and is housed in a Tier 1 data center for maximum security and reliability.

Market-makers and hedgers will realize the expanded outreach to more participants outside their voice brokers and direct market contacts. Flett Exchange will, through its industry contacts, bring parties with offsetting positions together to help mitigate exposure while helping to afford more trading opportunities.

Risk managers must be aware of the positions of swap to futures and have a mechanism to manage this risk on a day-to-day basis and also in the time of crisis. Swap to futures positions consume large amounts of capital in the form of margins while at the same time leaving open risk for a physical to financial decoupling in the event of force majeure in the underlying commodity.

Flett Exchange Launches Natural Gas Exchange For Swap EFS Market

mflett — Tue, 08 Apr 2008 17:19:39 +0000

Flett Exchange, LLC . launched the Exchange for Swap EFS market on its electronic platform today. The EFS market is actively traded Over the Counter OTC directly between counterparties or through voice brokers. The EFS Market on Flett Exchange allows market participants to swap futures positions with OTC positions cleared on different exchanges. EFS will be offered for Natural Gas with other energy commodities to follow. Most of the EFS trades will involve the swap of positions held on the New York Mercantile Exchange NYMEX and Intercontinental Exchange ICE.

Participants will be able to post their EFS orders directly on the Flett Exchange Electronic Platform. There is great need for a transparent and liquid market for EFS. Hedgers and market-makers alike utilize the EFS market to unwind similar positions which are double margined when held on different exchanges. This unwinding frees up capital enabling a more efficient Natural Gas Market. When capital is freed up particpants are more able to trade greater volumes and narrow bid-offer spreads for the benefit of bonifide hedgers.

When trades are executed on the Flett Exchange Platform a Flett Exchange employee will handle all necessary back office processing with either exchange just as a voice broker would do. Any EFS postings that need to be posted on the NYMEX Floor will be done by Flett Futures, Inc. Flett Futures, Inc. has been executing Futures trades on the NYMEX Floor since 1994.

Market-making opportunities are available along with the OTC broker program. OTC brokers can offer their customers the ability to execute on Flett Exchange thus expanding the pool of counterparties.