Translated material
Exchange on diesel
RTS introduces futures trading for petroleum products
Today the RTS will introduce a new exchange instrument - electronic futures trading in delivery contracts for diesel fuel. If they are successful, then by the end of the year the exchange may launch trading in other types of petroleum products - gasoline, fuel oil and jet fuel. According to the exchange, this mechanism will help hedge risks associated with changes in the price of diesel fuel.One futures contract provides for the delivery of 10 tons. Initially, contracts will be concluded with a delivery delay of one to two months. In the future, it is planned to increase the depth of negotiable contracts to 12 months. Contracts will be executed on the first working day of each month. Quotations will be given in rubles per ton. The size of the guarantee will be 10% of the contract value. Trading will take place every day in the usual RTS trading mode. The Volodarsk oil depot, owned by a subsidiary of Transnefteproduct, the Mostransnefteproduct company, was chosen as the supply basis for the new contract.
As Roman Goryunov, first vice-president of RTS, told Vremya Novostey, participation in electronic trading will be of interest primarily to direct buyers of diesel fuel (agricultural producers, builders, municipal buyers), as well as fuel producers and trading companies that profit from the price difference. “Settlement firms, that is, companies that have officially registered with FORTS and have their own client base, can participate in the auction. We have 118 such companies,” he explained. “Ordinary fuel consumers can apply to the exchange through a settlement company.”
“The main goal is to hedge risks, to protect yourself from the possibility of unfavorable price changes,” says Mr. Goryunov. “For example, if an agricultural producer entered into a contract in February for the supply of diesel fuel in April at one price, and by the time the contract was implemented, the market price of the fuel had risen sharply, then the exchange is obliged to pay the difference.” If prices decrease, the buyer will actually pay not for the price difference, but for his insurance against increases. “After all, when we insure a car, we don’t expect it to be stolen,” he says.
According to Mr. Goryunov's forecasts, by the end of the year the trading volume may increase to 10-15 thousand contracts per day. “Everything will depend on the activity of new participants joining the market; it is possible that we will be able to achieve this volume at an earlier date,” he believes. At the same time, RTS is confident that the first contracts will be concluded today.
Settlement firms also talk about the demand for the new mechanism. “The liquidity of this market will certainly increase,” the Algorithm company told Vremya Novostey. Fuel generator." “For example, we have more than 300 corporate clients, including carriers, builders, and agricultural producers, who annually lose 30-40% of their profits due to rising fuel prices.”
It is too early to say how viable the new mechanism will be and what impact it will have on the fuel market. Last summer, the RTS already launched oil futures trading. But despite the fact that the total trading volume at the end of the year exceeded 4.1 billion rubles, they did not have a big impact on the market - primarily due to the lack of a free oil market and the lack of demand for this type of service.