Japan Electric Power eXchange (JEPX), the primary exchange for electricity in Japan, has announced that they will enhance their market oversight capabilities with Nasdaq's (Nasdaq:NDAQ) leading SMARTS Market Surveillance platform.
The technology will give JEPX the surveillance tools to monitor spot and forward transactions of electricity for market manipulation, as well as complex analytical capabilities. The surveillance system will be operational before the full deregulation of Japan's electricity industry which is slated to enter into the country's retail sector in April 2016. Mitsubishi Electric Corporation (MELCO) will be the system integrator for this project.
"We're pleased to partner with a market leader such as JEPX, as we look to assist exchanges to become safer and more transparent for market players across the globe," said Lars Ottersgård, Executive Vice President, Market Technology. "As deregulation of the electricity sector increases the role of JEPX in the setting of electricity prices in Japan, SMARTS Market Surveillance will enable JEPX to leverage sophisticated surveillance technology to support the growth of the market and safely optimize trading activity."
Traditionally the Japanese electricity industry has been divided into 10 regions each with a monopolistic, vertically integrated utility responsible for generation, transmission and distribution networks to customers. The industry has focused on the security of supply and retail electricity prices which are among the highest in the world, since utility providers are allowed to pass costs to consumers and aren't exposed to competition.
To increase competition and efficiency in the market the Japanese government embarked on a policy of deregulation which has accelerated in recent years. JEPX's trading volume has been increasing significantly due to these deregulation measures and the exchange will play an increasingly important role in setting of power prices. In 2016, the distribution to the retail sector is expected to be fully opened up, and electricity derivatives products will also be introduced in the market.
SMARTS Market Surveillance platform is able to identify manipulative practices across all forms of trading, and Nasdaq has invested in visualizations and detection techniques focused on protecting electricity and power markets. SMARTS Market Surveillance will also be rolled out across Europe by the European Union to monitor all wholesale electricity market activity.
SMARTS surveillance solutions operate in more than 50 trading venues and regulators, and more than 90 market participants across 65 markets.
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