POWER: Finnish Regulator Rejects Unjustified Changes to Flow-Based Calculations
Jan-17 15:04
The Finnish Energy Authority has criticised Norway’s Statnett for making unjustified and uncoordinated changes to the Nordic flow-based capacity calculation method, warning that such actions undermine market transparency and disrupt electricity price stability, the authority said.
- The Energy Authority is concerned about the quick and opaque changes made by Norwegian transmission system operator Statnett to the starting values of the flow-based calculation on 21 December.
- Authority believes the changes could result in more frequent, unforeseen adjustments, complicating market participant preparedness.
- And that TSOs should ensure changes are coordinated, justified, and communicated in advance to market participants.
- The Finnish body does not have the authority to intervene in the operations of other Nordic TSOs but will discuss the matter with other regulatory bodies.
- On 21 December 2024, Statnett’s change altered the FRM (Flow Reliability Margin) values used in the calculation, which impacts electricity market prices. The move was due to reliability concerns.
- The TSO initially informed regulators of its intention to change these values in October 2024 but delayed the decision before introducing the new method in November.
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SCANDIS: O/N NOKSEK Vols Elevated Ahead of Scandi Decisions Tomorrow
Dec-18 15:04
Overnight NOKSEK vols have topped 10 points as tomorrow’s Riksbank and Norges Bank decisions come into view, the highest level since August and above the 7.2 YTD average. Although the rate decisions (25bp Riksbank cut and Norges Bank hold) are widely expected, focus will be on the updated rate path projections and guidance around the outlook for policy rates next year.
- That helps explain the 1-point O/N vol premium compared to the November decisions (which were also on the same day, but did not feature new projections).
- Overall, we view the risks to both decisions as slightly tilted in a hawkish direction, but the proximity of the events (Riksbank at 0830GMT and Norges at 0900GMT) still leaves scope for volatility in NOKSEK.
- An overnight ATM NOKSEK straddle requires a ~40 pip swing from current levels to break-even. On the downside, this would bring yesterday’s low at 0.9732 into view, clearance of which would strengthen a developing bearish threat in the cross. Initial resistance is the 50-day EMA at 0.9810.
- Our Riksbank preview is here and our Norges Bank preview is here
EURIBOR OPTIONS: Outright mid curve buyer
Dec-18 14:51
0RH5 99.12c, bought for 0.75 in 10k.
EQUITIES: Softer Through the Open, But More Meaningful Support Ahead
Dec-18 14:51
- The slide in equity futures into the cash open has persisted, putting the e-mini S&P at new daily lows of 6118.50 and well within range of the overnight and Tuesday lows at 6113.50. This puts cash markets lower in early trade, with the S&P 500 off by 0.1% to build on yesterday's lower close.
- While the December range is largely being respected, markets will look shakier on a break of tested support at 6107.00/03.50, a print below which puts the index at the lowest this month.
- Discretionary names are leading the weakness, with a lower open for Tesla (-2.5%) undermining the sector. In contrast, NVidia and semiconductors more generally are bouncing: NVidia is higher by near 3%, although will need to add another 3.5% here to get back to flat for December.
- The Fed decision certainly the market focus ahead, at which the FOMC are expected to proceed with a further 25bps rate cut. The market is set to focus not on today's decision itself, but on the messaging and communication for the path of policy across 2025, via the policy statement, Powell's press conference and the dot plot.
