OSLO (Reuters) – Commodities members of Nasdaq Clearing must collectively pay 100 million euros ($116.75 million) by Monday to refill a fund created to cover defaults, which used most of its capital to cover losses after a power trader’s default, Nasdaq said on Thursday.
Fluctuations in power prices led to the default of a Nordic electricity trader, with the exchange having to confiscate his portfolio to cover the losses it incurred as a result of the event, Nasdaq said.
“Nasdaq Clearing used 100 million euros from the default fund to cover losses and it also incurred a minor loss itself… Commodities members have two business days to put together the amount back to the default fund,” said a Nasdaq spokesman.
Sweden’s financial supervisory authority (FI) said the defaulting member’s collateral had been insufficient to cover the losses.
“Consequently, parts of Nasdaq Clearing’s capital as well as parts of the default fund contributions posted by non-defaulting commodity clearing members will be utilized to cover the losses,” FI said in a statement.
The decision to declare the member in default has no impact on the clearing of equity and fixed income derivatives, it added.
Reporting by Lefteris Karagiannopoulos, editing by Terje Solsvik and David Stamp