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Interview Peter Reitz: “Think local – act global”

01 Jun 2017

Interview Peter Reitz: “Think local – act global”Peter Reitz, CEO of EEX, on the commodities exchange’s strategy

Peter Reitz, CEO of European Energy Exchange AG (EEX), talks about the acquisition of Nodal Exchange and why the US expansion is an important strategic step for EEX and all of Deutsche Börse Group. 

Peter Reitz has been the CEO of EEX since 1 August 2011.

How does the acquisition of Nodal Exchange fit into the strategy of Deutsche Börse Group? 

EEX is the commodity arm of Deutsche Börse Group. We started out as an electricity exchange for the German market and evolved into a European energy exchange.

As expressed in the “Accelerate” strategy, it is our ambition to also be among the top exchanges in the commodities sector globally. This can only be achieved if we venture beyond Europe as well as outside of the energy sector. 

What synergies does Deutsche Börse anticipate from this cooperation? 

The cooperation allows Deutsche Börse Group to implement its existing T7 technology in yet another market, as the company is a 100 per cent match for us. It takes the same approach in the US as we do here in Europe: just like EEX, Nodal was founded by energy producers. To this day, they remain part of the ownership structure, making a valuable contribution to the development of the markets. Within the past year, Nodal Exchange was able to increase its turnover by 97 per cent and now holds a 22 per cent share of the US market. 

What exactly makes the US energy market so attractive?

For one thing, it is the largest energy market worldwide, which of course means that it is a major potential source of revenue. However, it is also attractive because the regulatory framework is comparable to what we are already familiar with here in Europe, and because it is open to competition.

In many countries, the energy sector is still dominated by extremely closed-off, monopolistic structures. Much like the European energy market, the US market is organised competitively, giving us the opportunity to step in.

How does the expansion into the US fit in with EEX’s strong focus on local presence?

EEX is indeed deeply embedded within local structures not only at our Leipzig headquarters but also at our 15 other locations, among them Amsterdam, London and Vienna. We have also just recently opened an office in Madrid. 

Clients want their contact persons to speak the local language. They also want them located nearby when there is a problem or the need to discuss a certain topic in more detail. This is the reason why we have locations where our clients are, true to our motto “Think local – act global” and vice versa. Our entering the US market was therefore the next logical step.  
The European energy market is currently undergoing change due to the turnaround in energy policy.

What is your assessment of the development in the US?

Even though the US market has an entirely different structure, it is also seeing an increasing share of renewable energy. This is, however, not due to the same reasons. In Germany, there are a number of government subsidy programmes and levies. The US has lots of regions where the most cost-efficient means of energy production is via wind turbines or solar panels. In other words: renewable energy has now become competitive in the US as well.

Are you planning further collaborations, e.g. with companies in Asia or Africa?

Whether a market is attractive for us depends on how much competition is possible. In a number of countries, especially in Africa, conditions are far from developed, and a suitable infrastructure quite simply does not yet exist. A market does not merely require the production of energy but also a transport infrastructure – an energy network. Only then can energy trading be organised.

A number of Asian markets are currently planning deregulation and are thereby following the development which took place here 15 years ago. As yet, there are only a few markets that have actually seen it implemented. I absolutely see further potential for cooperation, but it heavily depends on the speed of development within the individual countries. National energy policy is a crucial factor. We will remain open and continue to actively seek out possibilities and partnerships to cooperate and join forces. 

The interview was conducted by Claudia Behlen.

Vita Peter Reitz

After gaining a degree in mathematics, Peter Reitz started his career as a product manager at Deutsche Börse AG in Frankfurt. From 2000 to 2001, he worked at Dow Jones Indexes in New York before he became a Management Board member of the Eurex derivatives exchange.

What does the European Energy Exchange (EEX) actually do? What gets traded there? And how does the trading function? This video gives you an overall idea.

 

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