Welcome

RussellShorto

The History of Trade & Amsterdam

RussellShorto

The History of Trade & Amsterdam

Max vanMeerManaging Director

STX Services

STX Services | Amsterdam and Trade

• Agenda:• What is Trade?

• Examples Environmental Commodity Markets

• Market Outlook

STX Services | Amsterdam and Trade

STX Group

STX Services BV STX Fixed Income

STX Group• 60 employees• 20 nationalities• 1.250 active

customers

STX Services• Renewable Energy• Biofuel• Carbon • CSO• Energy Efficiency

STX Fixed Income• Bonds• Loans• Cash

STX Services | Amsterdam and Trade

What is trade?

STX Services | Amsterdam and Trade

Free Online Oxford Dictionnaires:

1 [mass noun] The action of buying and selling goods and services

STX Services | Trade

Price development of a random asset

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STX Services | Trade

Everyone wants to buy here…

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STX Services | A little history

And sell here…

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STX Services | Trade

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The fact is that we are here today…

STX Services | Trading decisions

STX Services | Trading decisions

What is important:• Timing

• Market access

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STX Services | Timing

Passive trading strategies• Buy when you need it (whatever the price is)

• Buy always at the same date (whatever the price is)

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STX Services | Timing

Active trading strategies:• Average out price

• Actively try to optimize price

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STX Services | Timing

Market intelligence• Market fundamentals

• Technical analyses

STX Daily Price Report 12 December 2012

Bio Products

Dutch Diesel Tickets

Dutch Diesel Tickets

Bid Offer

Spot 6.4 6.5 ↑

Dutch Gasoline Tickets

Dutch Gasoline Tickets

Bid Offer

Spot 6.7 6.8 ↑

Certificados de Biocarburantes en Diesel (CBD)

Certificados de Biocarburantes en Diesel (CBD)

Bid Offer

Spot 125 130 ↓

Certificados de Biocarburantes en Gasoline (CBG)

STX Services | Market Access

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STX Services | Market Access

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STX Services | Amsterdam and Trade

Timing in Commodity Markets that are driven by regulation

STX Services | GOO – one year ago

What did we know?• Natural trend: 12-month

expiry (but to what level?)

• Market was long

• Last year average price EUR 25ct

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STX Services | GOO – what actually happened

• Market: France joined system (supply increased from 250mio to 300mio)

• Average price EUR 12ct

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STX Services | CSO - one year ago

What did we know?• Oil market determines

CSO value (backwardation vs contango)

• New EU directive: all countries have to accept each other (but unclear on what type of product)

• Average price level: USD 2.5

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STX Services | CSO – what actually happened

• Market started at premium due to unclear legislation

• Prices continued to normal price levels (USD 2-3) after clarity0

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Diesel

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STX Services | Carbon - one year ago

What did we know?• Market was oversupplied

• Market was waiting for EU decision to take out excess supply

• Start of Phase III

• 85% free allocation instead of 100%

• Rest to buy via governments auction

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STX Services | Carbon – what actually happened

• Impact of Phase III:

• Industrials did not receive allocation till December 2013

• Mainly technical prop trading (12 players)

• One big event: ‘ EUROPEAN PARLIAMENT REJECTS CARBON-LAW FIX PROPOSAL’ (price drops 45% in one day)

STX Services | Certificate Verdi – one year ago

What did we know?• Producers can sell to

government at guaranteed price end of year

• Calculation: (EUR 180 – AEP) x 78%

• Spot market: expected guaranteed price discounted with interest rate

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STX Services | Certificate Verdi – what actually happened

Market drivers:• Upward trend towards buy-back price as expected

• Decline in December?

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CV 2013 Q1 CV 2013 Q2 CV 2013 Q3 CV 2013 Q4 Buy Back Price 2013

CV 2013 GSE buy back price: 89.28 Eur/MWh

STX Services | Certificate Verdi – what actually happened

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CV 2013 CV 2012 Buy Back Price 2012 Buy Back Price 2013

CV 2012 GSE buy back price: 80.34 Eur/MWh

CV 2013 GSE buy back price: 89.28 Eur/MWh

STX Services | Conclusions

First conclusions:• Understanding regulation can predict trends• Constant threat of regulatory changes (can have a

quick and significant impact) • Markets make unexpected movements

STX Services |What will move these price graphs?

• (28 EU member states….)

• ‘Energiewende’ in Germany

• Shale gas in US

• Subsidizing local industry?

• Cost of the system (Windfall profits, adverse incentives, Fraude)

• Court case ‘Ålands Vindkraft’ • Only carbon targets…?The outcomes of above discussion will lead to changes in regulation, that will affect prices

STX Services |Main Conclusion

You need to cooperate with the best (Environmental) Broker company in Europe

STX Group

STX Services

STX Fixed Income

STX Services |

THANK YOU!

Max vanMeerManaging Director

STX Services

Drinks &DinnerNow: Drinks & Bites at EYE

18h30 Boat trip with Dinner & Cocktails

21h00 Stopover at NDSM

23h00 Boat return at Amsterdam Central Station