Proposals for Prioritizing Bids and Managing Collateral Requirements in Auctions
Market Participants face significant collateral requirements in auctions due to multiple bidding zone borders. Proposal to assign priority to bids for credit limit reasons aims to address randomness in bid rejection. Bid XSD is extended to include priority as a component, enhancing bid management efficiency. Additionally, priority is assigned to borders per horizon in Web UI as a standing parameter, streamlining the process further.
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LTFBA Bid Prioritization 1 23/09/2024 JAO S.A.
Background With 20+ bidding zone borders being allocated in one auction, the collateral requirements for Market Participants would be very significant Collateral requirements are partially manageable currently because auctions do not close at the same time LTFBA is expected to raise the collateral requirement even higher HLMD proposes bid rejection at submission time: Depending on the bids and the borders on which the Market Participants are involved, they could potentially be expected to have millions in collateral Rejection at auction evaluation would lead to randomness in the bid rejection some borders might be completely removed from the bids due to different prices even if the Market Participant considered them important 2 23/09/2024 JAO S.A.
Proposals Allow Market Participants to assign priority to be taken into account at bid rejection for credit limit reasons Priority as bid component Priority as a parameter Priority as a bid flag Make no changes None of the proposals change the allocation algorithm this only applies to bid rejection for credit limit reasons. 3 23/09/2024 JAO S.A.
Priority as bid component Bid XSD is extended to include third component: priority PROs: CONs: Always up to date Development for WS clients required Faster to update in Web UI with drag and drop Priority is mandatory and unique for each bid More effort for MPs for each bid Priority is auto-allocated by bid order on the Web UI More granular Updated XSD for Bid document Sample Bid document: Drag and drop in Web UI: 4 23/09/2024 JAO S.A.
Priority as parameter Priority is assigned to border per horizon in Web UI as a standing parameter PROs: CONs: Set once and forget Granularity is lost No change in XSD Risk of MPs not updating it: default ranking required (alphabetic) Priority is not at bid level, but border level Less input required If not filled out, a default ranking needs to be applied most likely alphabetic sorting Purely Web UI based: no fallback possible File Auction Bid Capacity right Secondary market PAs Settlement Bulletin board Priority Options Horizon: Monthly Auction: CORE--M-BASE-------250301-01 Border Priority AT-CZ 1 AT-DE 5 DE-CZ 2 5 23/09/2024 JAO S.A.
Priority as bid flag Bids are marked as fixed and optional PROs: CONs: Less input required Change in XSD and WS clients required Fixed bids are checked against the credit limit at bid submission and consume collateral Credit limit is more stable as optional bids do not count Optional bids are still rejected on existing parameters (lowest bid price or bid value first) Optional bids do not consume collateral and are rejected after bid submission is closed Sample Bid document: Selection interface in Web UI: 6 23/09/2024 JAO S.A.
