Trading FTR's OTC
Interested in finding out as much as I can about trading FTR's. Specifically OTC. How much activity is there in the OTC market compared to trading through PJM? Can these trades be brokered or does the Nodal auctions defeat the purpose of a broker. Any info would be greatly appreciated.
FTRs or FTR-like products can be traded through PJM (auctions), Nodal matching sessions, and brokered OTC trades. There are a few more, but these are probably the largest markets. Most OTC market activity is focused around larger paths that generation owners or LSEs use for hedging. On the other hand, PJM auctions allow you to bid on paths between any two nodes in the system. Actually, that was a general statement and not exactly correct. Biddable nodes vary by auction and period...but that is a bit more detail than I'd like to go in for now as it is dependent on auction type and period within the auction.
I said FTR-like products at the beginning, because FTRs settle on the day-ahead congestion portion of the LMP while OTC products can settle on anything. Many will settle on some combination of day-ahead or real-time congestion, marginal loss, and system energy price -- the three components of an LMP.
As another thread discussed a few weeks ago, one of the recent differences between FTRs purchased through PJM auctions and their equivalent OTC products is that OTC products are fully funded while FTR participants have their positive settlements underfunded. The drivers of under-funding and the response in market pricing is a bit more complex, so I'll leave it at that for now.
Sorry if I mixed anything up here, but the majority should be correct. There have been a number of recent posts that go into a lot more detail. I believe one posters username was thompsonpsu or something along those lines.
Great. Thank you.
Hi out there! I have a question? can you virtual trade the nodal markets in the day ahead markets and be profitable and make a living? what are upto congestion products in PJM? what are the next markets to look at after PJM? any help is appreciated on this as I see some very smart people out there
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