NASDAQ COMMODITIES


LOSES ITS AAS... ‘Never yet has a simple headline presented itself and waited for me to write a story... until now!’


Some months...whilst searching for inspiration to write an article, I find it very hard. Other months, inspiration presents itself and I then work hard to bring the vision I see to the written word.


I have tried various versions of the headline…finally settling on the one above. What I find incredible is that – after doing a Google search – no other news or commentary organisation has used this headline. To my mind, it is simply calling out to be used.


Anyway, I’m not here to tell the story, except in the broadest brushstrokes. You, dear reader, can find out further specific details on your own. Instead, I’d like to share some specific questions and potential consequences from the fallout of the event in question. So...here goes...


Briefly, Einar Aas was a Norwegian power trader and one of the richest men in Norway (on occasion, he was the largest individual tax payer in Norway). He traded and cleared his own trades on NASDAQ Commodities and NASDAQ Clearing AB, specifically Nordic Power contracts. On the 10th September 2018, spread trades that Mr. Aas had placed between Nordic and German Power markets diverged massively, 17 times larger than in a normal day. As a result, on the 11th September, Mr. Aas was unable to meet margin calls and was declared in default at a cost of EUR 114mm. The default was covered by the Default Resources of the Clearing House, EUR 107mm from members and EUR 7mm NASDAQ. This was out of a total Default Fund of EUR 166mm. Here’s where the points I’d like to discuss, post default...start!


The Default Fund had exhausted approximately 69% of its resources on (and covering just a single member. What would have happened, perhaps more importantly) what would have been the reaction if there had been multiple member defaults?


10 | ADMISI - The Ghost In The Machine | November/December 2018


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