It should be easy to have your power and gas market access managed so you can spend your time growing your trading business. That's where we step in. Having the correct partners and a knowledgeable and experienced market management service provider is the key to a quick and frictionless market entry journey. Outsource your market access needs and focus on what you do best – trading.
— Eszter Pontenagel, Founder & CEO of Time2Market
A market scope is a detailed overview of all requirements and regulations for entering a specific energy market with the intention of trading. Scoping a market typically entails creating a plan for the most suitable option for entering a market. The trading body’s current strategy and conditions must be considered when scoping a new market.
When outsourcing your market access efforts, a market scope also contains a timeline and working process for the cooperation between you and your market management service provider. In this case, market scoping is an integrated service delivered by Time2Market as a first step toward entering a market.
The main concerns of a market scope are getting a trading or a shipping license, becoming a Balance Responsible Party (BRP), gaining membership in an Exchange, and finding a suitable bank. Let’s take a closer look at each of these:
Gaining a trading or a shipping license is not a requirement in all cases but is always a step that needs to be taken first. These licenses are generally provided by the National Regulator Authority, which governs the market you are trying to enter. While it is usually mandatory when entering a gas market, it can sometimes be avoided when it comes to power trading. The process is always unique for each market you are accessing and each commodity you are trading.
Each Transmission System Operator (TSO) has a unique application process for receiving BRP status, allowing you to take physical positions within the given power grid. By becoming a BRP, you are financially responsible for helping balance the grid. Any imbalances you cause on the grid may be penalized.
Becoming a member of an Exchange can be a lengthy process, if you do not have the full picture on the interconnectivity between certain Exchanges and TSOs across Europe. It is up to you which and how many Exchanges you want to enter in a given market. Some entry processes will be much simpler than others, depending on which markets you are already trading in. It all comes down to your strategy.
Every TSO and Exchange has its own banking requirements, which are influenced by your conditions and the markets you are currently a member of. It is always challenging to find a bank that can handle the complexity of trade settlements and clearing, and if you do not have a close relationship with those banks, the process becomes even more time-consuming. We at Time2Market work in close collaboration with settlement banks across the Nordics and CWE to ensure quick and frictionless setup for our clients.
It is essential to differentiate between the North American and European power and gas markets. While in Europe, there is usually a clear distinction between NRAs, TSOs, and Exchanges, the system is quite different in North America.
Because of the Nodal system in the North American energy industry, some states and markets have an ISO that acts as both an Exchange and a TSO, while in other states, these counterparties are separate. Even if you are already active in some American markets, you usually still need to go through the entire market access process.
You need to scope a market properly before beginning a market access process to avoid being surprised by deadlines and requirements that are not always straightforward. We have witnessed cases where a trading house missed a minor deadline because it was not noted on the counterparty’s website, and they had to wait for a new approval. In turn, some of their documentation expired and had to be redone.
Do not let a minor detail hurdle your market access journey. Let Time2Market deal with the administrative tasks and fluffy requirements.
At Time2Market, we will book a meeting with you after you contact us regarding an energy market you wish to enter. This meeting will discuss your interests, strategy, requirements, timeline, activities, and setup. Then, we will create an overview of the market access process for your desired market according to your conditions.
All you have to do while we prepare your scope is answer an email or two from us. By outsourcing market access through Time2Market, you can continue to focus on your daily operations and save yourself the time and frustrations of international counterparty communication.
Each market you enter is unique and has its own requirements. In some, becoming a BRP takes three months; in other cases, it might take up to a year for the fundamental works to be laid down. In some cases, establishing a relationship with a settlement bank is relatively straightforward, while in others, it might take the effort of a whole business development department. The difficulty of entering every market is different, and we know where our attention needs to be. Let us handle this hassle while you do what you do best – trading.
With close to 20 years of combined experience in the energy industry, in both market access and trading short-term, long-term, physical, and financial power, we know what we are doing.
Reach out to Time2Market and let us accelerate your business.
And if you want to ensure continued focus without distraction even after your market entry, take a look at our Market Continuity package and spare yourself the ad-hoc administrative tasks for years to come.
We deliver. You excel.
Disclaimer: Time2Market ApS is not responsible for the completeness, accuracy, and actuality of the information provided. This article is intended for informational purposes only and should not be considered business or legal advice.
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