Clearing Bank Hanover to Become Central Counterparty in German OTC Electricity Market; Ground Breaking Agreement Provides Solution to Counterparty Risk in German OTC Market.Business Editors HANOVER, Germany--(BUSINESS WIRE)--Dec. 18, 2001 Clearing Bank Hanover AG ("Clearing Bank"), today announced a clearing solution for the German Electricity Forward market. Clearing Bank, backed by three leading European Banks, Commerzbank AG, NORD/LB NORD/LB Norddeutsche Landesbank (German Bank) and Vereins-und Westbank AG, will provide a clearing solution which will eliminate counterparty risk Counterparty Risk The risk to each party of a contract that the counterparty will not live up to their contractual obligations. Notes: In most financial contracts, counterparty risk is known as default risk. , traditionally associated with OTC OTC See: Over-the-counter. OTC See over-the-counter market (OTC). contracts. Additionally, Clearing Bank will automatically provide netting of trades and daily mark-to-market services thereby further reducing participants risk and exposure in these markets. Clearing Bank will offer a clearing service for physical electricity contracts for delivery to the German power grids in co-operation with GFInet and PowerITS who offer internet-based electronic trading platforms combined with voice brokerage. GFI GFI Ground Fault Interrupter GFI Go For It GFI Government-Furnished Information GFI Growing Families International GFI Goodness of Fit Indices GFI Government Financial Institutions (Philippines) GFI Gross Farm Income is Europe's leading Energy broker and PowerITS has a strong presence in the Nordic markets. Clearing services are scheduled to commence in the spring of 2002. The Clearing Bank has licensed the FOCS FOCS Foundations Of Computer Science FOCS Fiber Optic Chemical Sensor (DecisionLink, Inc.) FOCS Fiber-Optics Cable System FOCS Flexible Operation and Control System (Coresma) system from NOS ASA Asa (ā`sə), in the Bible, king of Judah, son and successor of Abijah. He was a good king, zealous in his extirpation of idols. When Baasha of Israel took Ramah (a few miles N of Jerusalem), Asa bought the help of Benhadad of Damascus and , the proven supplier of clearing services to the Nordpool Power Exchange. Clearing Bank's account model has been designed as an open structure, enabling it to easily accommodate additional brokerage platforms, products and cross border markets. This provides sufficient flexibility to deal with the continued deregulation Deregulation The reduction or elimination of government power in a particular industry, usually enacted to create more competition within the industry. Notes: Traditional areas that have been deregulated are the telephone and airline industries. of the European power markets. Clearing Bank anticipates a high level of interest from traders and brokers who will be attracted by the open participation model and the efficient management of transactional data and collateral. Udo Ziegenhorn, CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Clearing Bank Hanover said: "By removing counter-party exposure, this initiative overcomes the largest drawback of the OTC market. Securing the commitment from both GFInet and PowerITS adds a tremendous level of credibility to this project and we welcome other power industry participants to join this consortium as well. The OTC market has been growing exponentially over the last decade where traded volumes in the OTC forwards market are already 10 times physical production, our Clearing solution will ensure continued growth in these markets." Ron Levi, Managing Director GFInet London added; "Clearing Bank Hanover has directly responded to the recent high profile credit issues in the industry by providing a service that eliminates counter-party risk. GFI looks forward to working with the Clearing Bank to provide a market-wide solution." Dr. Michael Redanz, CEO of PowerITS pointed out: "The experience in Scandinavia has shown the importance of OTC Clearing for the development of the market which has recently become even more relevant." Note to editors For further information, contact: Clearing Bank Hanover AG: E. Michael Jesch +49 (0) 511 367899 30 jesch@clearing-bank.de GFInet: Michel Everaert +44 (0) 20 7422 1040 michel.everaert@gfinet.co.uk PowerITS: Kai Ristau +49 (0) 40 36 146 817 kai.ristau@powerits.com About Clearing Bank Hanover AG Clearing Bank started operation in 1998 as clearing house for the Hanover Commodity Futures Exchange Futures Exchange Traditionally, a term referring to a central marketplace where futures contracts and options on futures contracts are traded. More recently, with the growth in electronic trading, it is also used to describe the activity of futures trading itself. WTB WTB Want To Buy WTB Werktuigbouwkunde (Dutch) WTB FCC Wireless Telecommunications Bureau WTB Wanting to Buy WTB Wales Tourist Board (UK) WTB What's the best WTB Willing to Buy , the first commodity futures market futures market, a commodity exchange where contracts for the future delivery of grain, livestock, and precious metals are bought and sold. Speculation in futures serves to protect both the developers and the users of the commodities from unfavorable and unpredictable in Germany. It was established by three major German banks, Commerzbank, Norddeutsche Landesbank and Vereins-und Westbank. By acting as a central counterparty to all transactions Clearing Bank eliminates counterparty risk and provides anonymity and speedy clearing services. Clearing Bank joined forces with NOS ASA which is the clearing service provider to the Nordic Power Market. About GFInet inc. GFInet creates independent online markets. Voice and online trading Online Trading Making trades via the Internet. Notes: The use of online trading increased dramatically in the mid to late 1990's with the advent of high-speed computers and Internet connections. Stocks, bonds, options, futures, and currencies can all be traded online. are integrated with real time and historical market data, market commentary and Fenics analytical tools. GFInet offers cash and derivative trading capability for the fixed income, FX, equity, energy and commodities. Market experience and liquidity are provided by GFI Group, a leading global, interdealer broker. www.GFInet.com About GFI Group GFI is among the world's leading interdealer brokers specialising in wholesale market transactions including derivatives, commodities, currencies and foreign and domestic securities traded among the world's leading financial institutions and energy concerns. Founded in 1987, the group employs more than 400 people worldwide. Headquartered in New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , the GFI Group services customers worldwide from offices in London, Hong Kong, Tokyo, Singapore and Sydney. About PowerITS PowerITS gathers and develops sustainable liquidity in the mature Continental European and Scandinavian energy markets. PowerITS offers the market a hybrid service combination of traditional OTC brokerage via telephone and a reliable and secure, internet based trading system. The corporate mission of PowerITS is to grant all market participants added value brokerage services, anonymity and price transparency. |
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