CCP Activity

OMIClear assumes the role of Central Counterparty (CCP) in the Service on Power Derivatives Contracts and the Service on Natural Gas Derivatives Contracts at the moment the trades and positions become registered in the respective registration accounts of the counterparties involved, as follows:

• In relation to trades resulting from an electronic matching process of orders in continuous trading or auction mode in a trading system of a connected Market, the assumption of the CCP role occurs as from the beginning, i.e. at the moment those trades are registered in OMIClear’s clearing platform;
   
• Regarding the trades on which the initial counterparties are carried out by the participants, i.e. bilateral transactions (usually known as ‘OTC trades’) registered in OMIClear through a connected Market, the assumption of the CCP role results from the replacement of the OTC deal originally submitted by the respective participants by new trades on which OMIClear acts as the seller party before the buyer participant and the buyer party before the seller participant. In this case the CCP role is assumed at the time when these new novated trades are registered on the clearing platform.

The Clearing Members of the participants involved in such trades become counterparties of OMIClear at the moment on which that registration takes place. When a Registration Agent or its client holding a Clearing Agreement with a Clearing Member registers a trade in OMIClear, at the same moment that OMIClear assumes CCP role of this trade:

1. The Clearing Member becomes automatically counterparty of OMIClear;
2. The Registration Agent or its client becomes counterparty of its Clearing Member.

All the trades are registered on OMIClear’s clearing platform automatically and immediately.

The clearing and settlement activity comprises the following functions:

• Positions registration;
• Assessment of the risk exposure arising from these positions;
• Collateral requirements to cover such risk exposure;
• Management of cash settlements at TARGET2 payment system;
• Notifications of the physical positions to third parties (Iberian power spot market and Iberian natural gas TSO);
• Billing process.

OMIClear has in place a rigorous and transparent risk management framework, backed by multilayered resources in the form of margins to cover potential losses of risk takers (“defaulter pays”), dedicated own funds (“skin in the game”), clearing fund contributions (that consists of a risk-sharing arrangement among its members) and equity capital. The default waterfall is designed to ensure further incentives for robust risk management.

OMIClear was incorporated on April 6th, 2004. After a comprehensive approval process between governments of Portugal and Spain, the MIBEL derivatives market (managed by OMIP) and the respective Clearing House (OMIClear) was launched on July 3rd, 2006 being one of the first joint MIBEL initiatives going live.

The MIBEL International Agreement signed in October 2004 and its amendment signed in January 2009 established the future shareholding structure of OMIClear: equal participations by OMI – Polo Español, S.A. (OMIE) and OMIP – Pólo Português, S.G.M.R., S.A. (OMIP) as market operators of the spot market and the derivatives market, respectively, of OMI group. OMIClear’s shareholding structure is therefore established in an international public law.

In October 31st, 2014 OMIClear has been authorized under EMIR (European Market Infrastructure Regulation – Regulation 648/2012) to perform its activity as an ‘authorized CCP’ by CMVM (the Portuguese Securities Market Commission - the National Competent Authority under EMIR regulation).

Currently OMIClear is authorized to provide services to the following classes of financial instruments (published in ESMA website):

• MIFID Financial Instruments:
  • Derivatives (financial instruments referred to in Section C of Annex I of MiFID):
    • Commodities:
      a. RM - Derivative contracts relating to commodities the execution of which takes place on a regulated market as within the meaning of Article 4(1)(14) of MiFID;
      b. OTC - Derivative contracts relating to commodities which are OTC derivative contracts as within the meaning of Article 2(7) of Regulation 648/2012.
       
• Other - Derivatives that are not MIFID Financial Instruments:
  • Commodities.