Tutorial on the Differentiation Asset-backed Trading vs. Proprietary Trading
Type
monograph
Date Issued
2023-09-12
Author(s)
Abstract
Let a pump storage plant be shared by various energy suppliers. Acting as partners they have committed themselves to purchasing a pro-rata share of the energy and to pay a pro-rate share of the annual costs. One of these partners – likely the one with the largest share – oversees operating the pump storage plant. The non-operating partners may submit their schedule to the operating partner daily under specified restrictions.
In section A) we demonstrate conceptually, how the added value of flexible power plant capacity can be monetized in the context of asset-backed trading, and how asset-backed trading differs from speculative proprietary trading, especially with a focus on the risk exposure. Section B) sensitizes to the importance of transparency and efficiency in energy trading within the Swiss Federal Electricity Supply Act. We put into the focus the principles for the determination of the electricity tariffs based on the legally binding rulings of the Swiss regulator ElCom as well as the information asymmetry between operating partner and non-operating partners and its impact on the added value potential.
This tutorial paper is addressed to persons, who are interested in critically reflecting the transparency and efficiency in trading units.
In section A) we demonstrate conceptually, how the added value of flexible power plant capacity can be monetized in the context of asset-backed trading, and how asset-backed trading differs from speculative proprietary trading, especially with a focus on the risk exposure. Section B) sensitizes to the importance of transparency and efficiency in energy trading within the Swiss Federal Electricity Supply Act. We put into the focus the principles for the determination of the electricity tariffs based on the legally binding rulings of the Swiss regulator ElCom as well as the information asymmetry between operating partner and non-operating partners and its impact on the added value potential.
This tutorial paper is addressed to persons, who are interested in critically reflecting the transparency and efficiency in trading units.
Language
English (United States)
HSG Classification
contribution to education
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Name
Tutorial_Trading_20230921_Englisch.pdf
Size
567.93 KB
Format
Adobe PDF
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