Turkey's Energy Market Regulatory Authority
("Authority") has introduced new procedures and
principles for calculating collateral amounts for wholesale market
participants ("Procedures and Principles"). Electricity
market participants can offer collateral in cash or via certain
specified assets. Such collateral is intended to cover situations
where market participants fail to meet their obligations, mitigate
the Market Operator's risks, as well as secure other market
The new Procedures and Principles outline Enerji Piyasaları
İşletme A.Ş.'s, responsibilities as the
authorized Market Operator (Article 5). They also describe detailed
circumstances where the Market Operator can increase the collateral
value (Article 6), as well as secured transaction processes
The Procedures and Principles list certain assets which are
accepted as collateral, along with value calculation methods
The Market Operator should determine
the minimum cash collateral ratio for market participants regarding
day-ahead balancing and the intraday market. The Market Operator
should publish the ratio at least one month prior to its effective
Rather than cash, Market participants
can also provide collateral via one or more assets, provided these
assets are listed in the Procedures and Principles.
Asset collateral and guarantee
letters in foreign currency are subject to a valuation coefficient.
The Market Operator determines the coefficient, at the suggestion
of the central reconciliation bank, in accordance with coefficients
applied in similar markets. The Market Operator announces the
coefficient to market participants through the Market Management
Market participants bear all
The Market Operator should determine the initial collateral
margin via the Margin Calculation Procedure and publish this
through the MMS at least one month before its effective date
In principle, for the Market Operator to accept offers by market
participants regarding day-ahead balancing and/or the intraday
The value of cash collateral
presented should be greater than or equal to the minimum
The collateral level should be
greater than or equal to the total collateral value presented.
The Procedures and Principles outline general principles for
collateral control (Article 11):
The collateral value which market
participants should provide for day-ahead balancing and intraday
market activities, as well as the initial margin value to be
provided, should be borne by the relevant market participant.
The collateral value provided for
reconciliation of instability should be borne by the party liable
for the relevant stability.
If it is determined the total
collateral provided by a market participant does not cover the
total risk, the Market Operator can request the participant present
an increased collateral value in line with the Margin Calculation
The Procedures and Principles were published in Official Gazette
number 29725 on 28 May 2016, entering into effect on 1 June 2016.
The Procedures and Principles were adopted by the Energy Market
Regulatory Board decision dated 13 May 2016. Please see this link for the full text of the Procedures
and Principles (only available in Turkish).
Information first published in the
MA | Gazette , a fortnightly legal update newsletter produced
by Moroğlu Arseven.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
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