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FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT JUNE 2010NASDAQ OMXStellan RåbergHead of Advisory Services, NASDAQ OMXIn the future, the need for transparency,liquidity and efficiency in the world’s powermarkets can be met by open, electronicmarketplaces for trading and clearing.In the future, the need for transparency,liquidity and efficiency in the world’s powermarkets can be met by open, electronicmarketplaces for trading and clearing.There are many benefits to establishing anopen power market. The main ones includeincreasing overall market efficiency bycreating clear price signals, and promotinginvestment in additional production capacityby creating a market to attract domestic andinternational capital.Open power markets already exist in somegeographies, most notably in the Nordiccountries of Finland, Sweden, Denmark andNorway where Nord Pool ASA, recentlyacquired by NASDAQ OMX, has beenoperating since the early 1990s.The Nordic financial power exchange is now apart of NASDAQ OMX Commodities, whichoffers global commodities trading andclearing services. The NASDAQ OMX Nordicpower market now counts more than 385members in 22 countries, and its operationsserve a wide range of energy producers,consumers and financial institutions.NASDAQ OMX Commodities also offerstrading in Dutch and German powerderivatives and has been part of starting anew physical power market, N2EX, in theUnited Kingdom.The Nordic experienceThe underlying Nordic physical market,operated by Nord Pool Spot, accounts forover 60 percent of the total value of theNordic region’s power consumption. A keybenefit of the Nordic power market is that itenables each country to assist each otherwhen additional electricity supplies arerequired. If one country is unable to satisfydemand from its own output, it can import thenecessary power from a neighbor.The common Nordic market primarily involveselectricity generation from such resources aswater, nuclear energy and coal. Since thegenerating modes differ and are distributeddifferently in the various countries, the needfor additional power will vary from country tocountry and at different times.Well functioning power markets, such as theNordic, generally tend to ensure thatelectricity gets generated wherever the cost ofgeneration is lowest at any time of the day.Increases in demand are balanced againstmore expensive modes of generation. Insocio-economic terms, this provides a clearindication of the cost society would have tobear to incorporate new output in the system.Where commercial considerations areconcerned, generators will receive a goodindication of where the break-even point liesfor developing new generating capacity. TheNordic’s physical market also helps to ensurethat power supply and demand are balancedright up to one hour before the time ofconsumption.Risks associated with changes in physicalmarket prices can normally be managedthrough a financial market for energy relatedderivatives products. A buyer or seller ofpower may be able to reduce the risk offuture price changes by selling or buying thecost of future electricity to or from otherplayers with the ability and willingness toaccept these price risks. Players may therebyhave the opportunity to change their riskexposure and to hedge the price of futureoutput or consumption.With the acquisition of Nord Pool ASA,NASDAQ OMX Commodities is now thelargest and most liquid energy exchange inEurope. NASDAQ OMX Commodities alsoincludes a clearing house for all productstraded at the energy exchange, making it theworld leader in cleared power volumes.PAGE 28