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d-cypha and SFE launch Oz Electricity Futures

Statement from d-cypha Limited

24 July, 2002

d-cypha and SFE Corporation launch Australian Electricity Futures contracts

A partnership between New Zealand company d-cypha Limited and SFE Corporation Limited, operator of the Sydney Futures Exchange, will see a range of new Australian Electricity Futures products listed at the Sydney Futures Exchange on Tuesday, 3 September 2002.

Announcing the move today d-cypha Chief Executive John Field said the major contribution the Transpower subsidiary would bring to the partnership was not money, but its intellectual capital in the form of its knowledge and understanding of electricity markets. The company would operate in the Australian energy market under the name d-cyphaTrade he said.

“The SFE Corporation Limited is a major financial exchange and central counter-party clearing organisation with 24 hour, fully electronic trading capability and a network of communications hubs around the world. On average, SFE handles almost 141,000 futures and options contracts each day, with in excess of 37 million contracts traded annually.

“We have been working with SFE for several months to design products for the Australian market. The product suite to be released is a result of extensive consultation with both financial market participants and energy companies. International research has also been undertaken on current world best practice.”

The new electricity futures contracts are based on both Base Load and Peak-Period energy bought and sold in the National Electricity Market (NEM) in New South Wales, Victoria, South Australia and Queensland. The contract unit will be 1 Megawatt of electrical energy per hour. The contracts will be quarterly and will be available up to 15 quarters, or 3 3/4 years, out.

“The partnership with d-cypha has proved invaluable in getting this new offering to market,” said Mr Peter Hiom, SFE General Manager of Strategy and Business Development. “By combining their knowledge and experience in electricity markets with the SFE’s expertise in product development, trade execution and clearing, compliance, surveillance and market management, we are in a position to offer a very compelling service to this market.”

The d-cyphaTrade SFE offering optimises energy traders access to the market and the trading mechanisms available to participants. Direct access to SFE’s trading engine is available via dedicated terminals or internet browsers made available by many of SFE’s Full Participants and their customers. In addition to outright product trading available via the SFE trading engine, SFE will provide dedicated strip products for the trading of calendar and financial year exposure. The SYCOM custom market is available for less frequently traded strategies such as inter-commodity spreads, EFP’s (Exchange for Physicals) and Block Trading (large volume off-market trades).

The SFE Clearing guarantee and novation services, together with the anonymity that futures markets provide, should bring significant benefits to the electricity sector.

“We are also fortunate that most of those who wish to trade in electricity futures are already SFE Participants or clients of Participants. This means that for these organisations there will be a seamless transition to the new contracts”, he added.

John Field said the move was a significant development for d-cypha and one that was likely to lead to other opportunities.

“We believe that New Zealand would also benefit from a well designed and active electricity futures market and we are looking at this possibility. Such a market allows both generators and major users to better manage their risk, and thereby improves the operation of the electricity market.”

d-cypha Limited is a leader in the collection, verification, manipulation, storage and analysis of very large volumes of complex data, primarily in the electricity sector. It is a 100% owned subsidiary of Transpower Ltd, the operator of the New Zealand national electricity grid.

SFE Corporation Limited (SFE) is a provider of exchange-traded and over-the-counter financial services for institutional investors globally. Fully electronic and with 24-hour trading capability, SFE offers trading products for investment and risk management and disseminates market data and information. SFE Clearing is the fully owned clearing and settlement arm of SFE Corporation Limited, and provides central counterparty clearing, central securities depository and cash settlement services.


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