FAQs
These Frequently Asked Questions (FAQs) are a cross-section of the most common enquiries received by d-cyphaTrade.
ASX Information Session - 6 December 2007
Please see ASX Information Session for more details on the recent operational enhancements, includes questions and answers.
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Can the market be accessed directly without a SYCOM terminal?
Yes. There are a number of Independent Software Vendors (ISVs) who can provide systems to connect directly to the Exchange. Any of these access options can be via an SFE Full Participant to provide anonymity. Exchange for Physical (EFP) and off-market trades (Block Trades) may be registered with an SFE Full Participant.
What are the costs per annum of having a SYCOM terminal?
A Full Participant can arrange to supply a SYCOM workstation. Subject to being approved as a client, the standard cost for a SYCOM workstation is $1500 per month, plus communication costs of approximately $1000 per month.
How are the variation margins calculated?
SFE Clearing Corporation calculates initial margins to cover 99% of anticipated daily electricity futures price movements. With respect to the new electricity futures contracts, SFE Clearing Corporation has established (and will regularly review) different margin levels for different contract quarters that reflect seasonal volatility.
Variation margins are calculated using 'daily futures settlement prices', i.e. variation margins are called to ensure the difference between the daily futures settlement price and the price at which futures positions are opened is marked-to-market, i.e. adjusted in client's accounts.
What are the Exchange fees for trading/clearing per trade?
The transaction fees for the d-cypha SFE Australian Electricity Futures products are as follows:
- Base Load Electricity Futures and Base Load $300 Cap Futures $37.00 (+GST) per contract side
- Peak Period Electricity Futures and Quarter 1 Peak Options $16.00 (+GST) per contract side
- Base Load Calendar Options $74 (+GST) per contract side
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Can orders less than the minimum threshold for a contract be aggregated to form a Block Trade?
No. Participants may not aggregate separate orders to meet minimum threshold requirements. However, Participants may aggregate any orders individually greater than or equal to the minimum threshold. For example, if the minimum threshold is 15 lots, a buy order for 60 lots may be satisfied on the sell side by four 15 lot orders.
Do the counterparties to the Block Trade have freedom to determine the price of the transaction?
Yes. There are no explicit price limits attached to Block Trades. Block Trades may legitimately occur at prices different to the SYCOM market price for the contract at the time of trade agreement.
What information does SFE require?
Participant mnemonic (buyer and seller), contract, contract quarters(s)/strip(s), price (of individual legs), number of lots (each leg), time of trade agreement and name of individual authorised by the Participant(s) to submit Block Trades.
What is the nature of the trade approval process?
Upon receipt of the Trade Registration Form, SFE staff will validate the following:
1. The difference between the time of trade agreement (from SYCOM message) and the time of receipt by SFE (from Trade Registration Form)
2. Whether the trade meets the minimum size threshold requirements for the prescribed contract(s)
3. The trading rights of the Participant(s)
4. The price of the contract(s)
After the trade is agreed between participants, how long does SFE require to process and publish the transaction?
The SFE Participant(s) to a Block Trade must release a message via the SYCOM message facility within 5 minutes of trade negotiation. These messages are available from the d-cyphaTrade and SFE websites and via free email alert service from d-cyphaTrade. Subject to validation, SFE will disseminate confirmation of Block Trade information within 2 hours of registration. Validated Block Trades will be published to the market via the SYCOM message facility. Executing Participants will however be informed immediately after SFE has validated the Block Trade.
Are participants required to adhere to standard disclosure/pre-arrangement/withholding business rules when executing a Block Trade?
No. All trades executed pursuant to the Trading Rules for Block Trades will be deemed to have been made in accordance with the standard contractual and clearing structures of the market. However, Participants should note that the prohibitions under Trading Rules TR.17.1©(v) (Withholding in Order to Cross), TR.18 (Disclosure of Information) and TR.19 (Prearrangement), will not apply to transactions executed pursuant to the Trading Rules for Block Trades.
Can a Block Trade affect SYCOM prices/volumes /settlements?
No. As an off-market trading facility, the BTF will not interact with the SYCOM market. Block Trades will therefore not affect any open/high/low/close/volume information in the SYCOM market nor will Block Trade prices be used for settlement purposes. However, Block Trade volumes will be included in all SFE market data reporting.
What SFE fees are charged for Block Trades?
Validated Block Trades will attract the standard trading and clearing fees relevant to the executing Participant. In addition, Block Trades will attract an additional administration charge. Further information on SFE fees can be found on SFE's website: http://www.sfe.com.au
Can the counterparties to a prospective futures transaction discuss the terms of a Block Trade and EFP?
Yes. The counterparties to a prospective futures transaction may directly discuss the terms of Block Trades and EFPs Business between themselves. The counterparties must in turn place their orders with a SFE Full Participant. Counterparties to a prospective futures transaction that are not licensed futures brokers cannot advise, hold client orders or execute futures contracts on behalf of others.
Can a non-licensed futures broker advise clients on Block Trades or EFPs? Or Can OTC brokers who are not otherwise registered futures brokers "match" transactions such that the "counterparties" can then call their respective SFE Clearing Participant to book the deal with the exchange?
No. While an EFP or Block Trade Business may originate in the OTC market, only licensed futures brokers can advise, hold or transact futures contracts on behalf of clients.
Can a SFE Participant divulge the details of Block Trades and Exchange for Physical Transactions prior to Market Wide Notification?
No. SFE Participants may only divulge the details of Block Trades and Exchange for Physical Transactions after Market Wide Notification.
Can a SFE Participant disclose Client Identities?
No. A SFE Participant cannot disclose client identity.
Does a SFE Participant require written authorisation from its clients allowing it to conduct off-market business on each client's behalf prior to entering into a Block Trade or EFP?
Yes. This authorisation can be in the form of an e-mail and is a ‘one-off' requirement, however the Participant should maintain such authorisation on file. Alternatively, this authorisation may be included as part of the Participant's Client Agreement Form.
Are the details of EFP prices published?
Yes. The full details of EFPs are published on the SFE message facility. It is important to note that the prices of EFPs are not always indicative of current market prices as they may be lodged at the price that was close to where the initial OTC transaction was dealt.
Are the prices of EFPs and Block Trades used for calculating daily settlement prices?
No. Only the trades executed on SYCOM (including trades in Strip Products and custom market) are referenced when determining settlement prices.
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