ICE Expands Global Natural Gas and Power Markets with New Contracts

Intercontinental Exchange (ICE) has expanded its global natural gas and power markets by launching new contracts. The company introduced JKM LNG (Platts) options, which complement existing average price options that settle against the underlying future's settlement price at the end of each month. These new options allow customers to manage Asian natural gas price risk at a specific point in time.

ICE also launched U.K. base electricity options and new LNG Balmo freight futures, including the Spark30S Atlantic Sabine Pass to Gate contract and the Spark25S Pacific NWS to Tianjin contract. These contracts enable customers to hedge shipping costs on two closely watched routes.

Gordon Bennett, Managing Director of Utility Markets at ICE, stated that the new contracts provide additional ways to manage price risk associated with natural gas and power production, transportation, and consumption. He added that ocean tankers act as a virtual pipeline connecting JKM and TTF pricing, and LNG freight contracts let customers manage the cost of transporting molecules more precisely.

ICE has also transitioned Japanese power futures, PJM basis power futures, and U.K. NBP natural gas options to its Value-at-Risk based portfolio margining methodology, known as ICE Risk Model 2 (IRM 2). IRM 2 models relationships between contracts rather than margining each in isolation, giving customers a more portfolio-based view of risk.