Free Simple Glossary of Energy Trading terms

An organization that manages the clearing for an Exchange

For much more information please refer to the Detailed Glossary

Flattening an open position to a net zero (or flat) position

For much more information please refer to the Detailed Glossary

A Confirmation is a document describing a trade that has been executed, and is generally sent by the Seller to the Buyer to check the trade details, to be returned by the Buyer confirming that the trade details match the trade as they have recorded it

The Confirmation, or Confirm, process allows both parties to agree the trade details

For much more information please refer to the Detailed Glossary

A fee is a cash payment which may be associated with:

• A single trade
• A group of trades
• No specific trades

For much more information please refer to the Detailed Glossary

A financial side or leg of a trade that is not fixed in advance, but is dependent on the value of some observable (usually an index) at a pre-agreed time related to the delivery date

For much more information please refer to the Detailed Glossary

An Index is a set of prices that are published for a commodity or product, usually derived from trading data, using an open and independent method

For much more information please refer to the Detailed Glossary

Like most businesses, we sell something, we deliver it, we raise an invoice, we send it to our buyer, we get paid - we hope.

The Master Agreement between us and our counterparty will specify if we raise an invoice for a specific delivery (of oil for example), or for a continuously delivered commodity (gas or power for example) over a period (usually a day, week or month)

For much more information please refer to the Detailed Glossary

Margining is a form of Settlement, whereby exposure to Credit Risk between two parties is limited by keeping the overall Credit Exposure below a certain threshold by means of Margin payments between the parties whenever the threshold is breached

For much more information please refer to the Detailed Glossary

When two parties execute a trade between themselves they specify the terms of the trade: Price, Volume, Location, timing etc.

But in order to successfully manage the trade's delivery and settlement a lot more information needs to be available than is captured in the trade details, such as when payment is due, who needs to notify a TSO etc.

This additional detail is held in a Master Agreement

Each trade that is executed is regulated by a Master Agreement

For much more information please refer to the Detailed Glossary

A Megawatt is a measure of energy per unit time

• in this case one million joules per second
• one watt being one joule per second

Abbreviation is MW

Not to be confused with MWh

For much more information please refer to the Detailed Glossary