White Papers

The Delegated Trading Model

Introduction 

Small players and newcomers often struggle with limited trading expertise, while service providers may lack access to critical structures and product features. The Delegated Trading Model is designed to address these challenges by offering an innovative setup for asset optimization, advanced algorithmic trading, aggregation, and congestion management services.

Key Features of the Delegated Trading Model 

The Delegated Trading Model includes several key features that enhance its functionality. Small players and newcomers can delegate the trading of their assets while still retaining the option to trade independently. Each asset owner is represented as a distinct participant, ensuring tailored management of assets. The model allows assets to be distributed across various participants linked to different Balance Responsible Parties (BRPs), facilitating extensive customization in trading strategies. Each participant can be provided with access to a different set of products, such as XBID NL, XBID DE, Ex-post, and GOPACS, enabling customized solutions. Financial settlements are managed directly by Etpa through individual wallets assigned to each participant, simplifying the settlement process. Furthermore, physical settlements are coordinated with the relevant BRPs to ensure timely and accurate execution. 

The image above illustrates an example of a potential structure.

In the infographic below, we show a simplified visualization of the functioning of the Delegated Trading Model. 

The delegated trader can utilize our ORDER-API to create orders on behalf of participants by including the specific ParticipantId in the order request. This ensures that the order is accurately associated with the intended participant. The order includes all relevant details, and the ParticipantId allows the system to process the order for the designated participant. Both the participant and the delegated trader can view, update, or delete the order via the ORDER-API. Other participants associated with the delegated trader will see this order as a regular entry in the order book. 

For trade retrieval, the delegated trader can use the TRADE-API to access trades associated with their participants. The delegated trader can identify the relevant participant by mapping the trade using the ParticipantId. If the trade was executed for a participant outside the delegated trader's scope, the ParticipantId field will be masked to maintain confidentiality. 

The BRP-API is exclusively available to BRPs. BRPs can use this API to retrieve trades related to the participants linked to their BRP. The BRP-API provides details on when the trade was executed and when it will be nominated by Etpa to the appropriate Transmission System Operator (TSO). Additionally, BRPs can integrate this API with their internal nomination systems for streamlined operations. 

Example 1: Delegation of Trading in the Intraday Market - XBID 

Delegated traders act as intermediaries in the intraday market, enabling asset owners to optimize trading strategies without requiring extensive market expertise. By executing trades on behalf of multiple asset owners, delegated traders can leverage real-time data and their market knowledge, capitalizing on real-time price fluctuations. Each asset owner’s portfolio is managed distinctly, allowing for customized trading strategies. While delegated traders handle trade execution, asset owners can also choose to trade independently when needed. Financial settlements are managed through individual wallets, simplifying processes, while physical settlements are coordinated with relevant BRPs, enhancing efficiency. 

Example 2: Delegation of Asset-backed Trading for Congestion Management Services - GOPACS 

A Congestion Service Provider (CSP) can act as a Delegated Trader, managing congestion services for multiple asset owners via GOPACS. This setup allows flexible use of assets like BESS systems and CHPs to address grid congestion by permitting deviations from their nominated positions. The CSP optimizes the use of third-party assets while enabling asset owners to retain independent trading capabilities. Assets are distributed across various participants linked to different or the same BRPs, allowing for efficient trading strategies. Financial settlements are handled through individual participant wallets, and physical settlements are coordinated with the BRP to ensure accurate trade execution. 

Further Arrangements and General Information 

Approval from the relevant BRP is required for each underlying participant before engaging in trading activities. This approval is facilitated through our BRP Trading Request form to ensure compliance. All entities involved, including delegated traders and participants, must complete Etpa’s Know Your Customer (KYC) procedure for proper verification, designed to be quick and straightforward. Each participant must maintain a wallet with sufficient balance, as their trading activities directly affect their distinct wallets. 

To meet REMIT II regulations, both the delegated trader and participants must have an ACER code. Etpa manages ACER reporting for the delegated trader and underlying participants, ensuring accuracy and compliance. By reporting individual participant data directly to ACER, Etpa reduces administrative burdens, contrasting with other platforms that report in aggregate. 

Conclusion 

The Delegated Trading Model provides a robust framework for small players, newcomers, and service providers to navigate the complexities of the energy market. By leveraging the expertise of delegated traders and utilizing efficient processes, participants can optimize their trading activities and effectively engage in power markets. For more information or to explore implementation of the Delegated Trading Model, please contact us.