Collateral
All customers have to post collateral as a guarantee that they can pay for the contracts they have entered into.
Collateral can be posted under different types of agreements which is described below.
Posting collateral for customers trading in the UK
Cash collateral account
The cash collateral account will be established by the collateral security deed and maintained as a blocked, segregated account (pledged in favor of Nord Pool).
No money may be withdrawn from the cash collateral account, except on express instructions of Nord Pool.
Letter of credit
The letter of credit denotes a letter issued by a bank to serve as a guarantee for a buyer’s payment to Nord Pool.
Bank guarantee
The bank guarantee designates from the guarantor that the liabilities (or the payments) of a buyer will be met, should the buyer fail to settle its financial obligations.
Rating requirements for guarantee and letter of credit issuers can be found here.
Templates and Agreements: All the above mentioned collateral agreements can be found under Rules and regulations, section D.
Posting collateral for customers trading in the Nordics, Baltics and CWE
All customers trading on the Nordic, Baltic and/or CWE market must establish a pledged settlement account agreement, pledged collateral account agreement or an on-demand guarantee to cover their collateral requirements towards Nord Pool. Note that in certain countries only a bank guarantee can be accepted.
Pledged collateral account
A pledged collateral account agreement will be established and maintained as a blocked, segregated account (pledged in favour of Nord Pool). No money may be withdrawn from the collateral account, except on express instructions of Nord Pool.
On-demand guarantee
An on-demand guarantee is a bank guarantee that imposes a primary obligation on the guarantor to pay the beneficiary in first demand. The guarantee acts as security for the liabilities (or the payments) of a buyer towards Nord Pool.
Bank guarantees and letter of credit issuers must be registered within an OECD country.
Rating requirements for guarantee and letter of credit issuers can be found here.
Templates and Agreements: All the above mentioned collateral agreements can be found under Rules and regulations, section D.
Margining and collateral
Before a customer starts to trade, they must post an initial collateral amount.
Depending on which trading model a member falls under, the initial collateral amount may be self-determined by a member (SmartCap Trading Model) or determined by Nord Pool (Classic Trading Model) but can never fall below the minimum collateral amount (EUR30,000). See more on trading models here.
Monitoring of collaterals
Customers can monitor their Collateral calls and postings/Trading Limits through CASS, our clearing and settlement system.