Romania: Derivative contract for natural gas to be launched by BRM for the first time

, SEE Energy News

On 16 November 2020, The Romanian Commodities Exchange (BRM) will launch derivate contract for natural gas for the first time in Romania, the company announced.

The statement from the BRM said that this event continues the effort of recent years of the BRM and Romanian producers and suppliers to build together a strong, modern and efficient natural gas market, able to finally offer the country the position and status it deserves in the region.

The current natural gas market is very young, but its development has been impetuous. In just a few years, BRM has managed to make available to participants’ mechanisms, tools and products developed for physical trading, able to provide a high degree of efficiency and synchronization with the operation of similar markets in European Union. Despite the legislative flaws that disrupted the domain and the state monopolistic tendencies of the authorities, in periods when they did not intervene in the market through unjustified taxes, traded volumes were high and prices followed a consumer-friendly dynamic. However, the introduction and operationalization of derivative contracts is proof of maturity and dedication.

Derivative contracts, which are essentially standardized forward contracts, are highly complex. Their main characteristics refer to fungibility, liquidity, flexibility of entry and exit from positions, maximum degree of security of solvency by involving a central counterparty in post-trading.

BRM believes that the launch of derivative contracts on natural gas will be boost the Romanian entrepreneurial spirit in the stock market, the beginning of a prolific development stage, marked by the hope of collaboration and understanding between market operators and participants with regulators, authorities and legislators in Romania, in favor of the economic environment and successful integration into European markets.