Order ECC/757/2014 authorizing BME Clearing, SAU to modify the general conditions for energy underlying asset contracts

OFFICIAL STATE GAZETTE No. 114 Saturday, May 10, 2014 Sec. III. Page 36178 III. OTHER PROVISIONS MINISTRY OF ECONOMY AND COMPETITIVENESS 4981 Order ECC/757/2014, of April 25, authorizing "BME Clearing, SAU" to modify the general conditions of the group of contracts for energy underlying assets.

Having seen the documentation submitted by BME Clearing, S.A.U. (hereinafter BME Clearing), requesting, under the auspices of Article 44 ter of Law 24/1988, of July 28, on the Securities Market, authorization for the modification of the General Conditions of the Group of Contracts for Energy Underlying Assets.

Finding that the modification of the aforementioned General Conditions aims for BME Clearing to accept operations for clearing and settlement originating from the Official Secondary Market for Futures and Options, whose governing body is MEFF Sociedad Rectora del Mercado de Productos Derivados, S.A.U., with whom BME Clearing has reached the corresponding agreement to act as Central Counterparty for the contracts traded in said official secondary market.

Finding that the modification of the aforementioned General Conditions also aims to modify the settlement method for monthly and weekly futures.

Considering that Article 44 ter of Law 24/1988, of July 28, on the Securities Market states that it corresponds to the Minister of Economy and Competitiveness, prior to the report of the National Securities Market Commission and the Bank of Spain, to authorize central counterparty entities to perform intermediation functions on their own account, regarding the clearing and settlement processes of obligations derived from the participation of member entities in the clearing and settlement systems of securities or financial instruments.

Considering that the entity authorized in accordance with Article 44 ter of Law 24/1988, of July 28, on the Securities Market, will carry out its activities subject to what is established in the corresponding internal regulations, which must be approved by the Minister of Economy and Competitiveness, prior to the report of the National Securities Market Commission, the Bank of Spain, and the Autonomous Communities whose Statutes of Autonomy recognize them with competencies in the matter of regulation of securities trading centers.

Considering that Order ECC/1556/2013, of July 19, authorizing "MEFF Sociedad Rectora de Productos Derivados, SAU" to separate the trading, counterparty, clearing, and settlement functions currently carried out, authorized the creation of a new Governing Body of the Official Secondary Market for Futures and Options, provisionally named "MEFF Exchange" and whose definitive name is "MEFF Sociedad Rectora del Mercado de Productos Derivados, S.A.U.", and also authorized the company provisionally named "MEFF Clearing", whose definitive name is "BME Clearing, S.A.U.", to continue acting as a central counterparty entity governed by Article 44 ter of the LMV.

Finding that both the National Securities Market Commission (CNMV) and the Bank of Spain, as well as the Autonomous Communities of Catalonia, the Basque Country, and the Valencian Community, whose Statutes of Autonomy recognize them with competencies in the matter of regulation of securities trading centers, have issued favorable reports on the authorization request submitted by BME Clearing, S.A.U., to modify the General Conditions of the Group of Contracts for Energy Underlying Assets.

Considering that the request and documentation submitted, as well as the requirements demanded, comply with what is required in Article 44 ter of Law 24/1988, of July 28, on the Securities Market. cve: BOE-A-2014-4981

OFFICIAL STATE GAZETTE No. 114 Saturday, May 10, 2014 Sec. III. Page 36179 This Minister resolves: To authorize the modification of the General Conditions of the Group of Contracts for Energy Underlying Assets of BME Clearing, S.A.U., so that it may accept, for its clearing and settlement, operations originating from the Official Secondary Market for Futures and Options whose governing body is MEFF Sociedad Rectora del Mercado de Productos Derivados, S.A.U., and to modify the settlement method for monthly and weekly futures. A sealed copy of the General Conditions of the Group of Contracts for Energy Underlying Assets is attached.

Against this order, which puts an end to the administrative route, a discretionary appeal for reconsideration may be filed before the Minister of Economy and Competitiveness, within a period of one month, counted from the day following the notification thereof, in accordance with what is provided in Articles 116 and 117 of Law 30/1992, of November 26, on the Legal Regime of Public Administrations and Common Administrative Procedure; or, directly, an administrative contentious appeal, before the Administrative Contentious Chamber of the National Court, within a period of two months, counted from the day following the notification of this order, in accordance with what is provided in Articles 11.1.a) and 46.1 of Law 29/1998, of July 13, Regulating the Administrative Contentious Jurisdiction. Madrid, April 25, 2014.–The Minister of Economy and Competitiveness, P.D. (Order ECC/1695/2012, of July 27), the Secretary of State for Economy and Support for the Enterprise, Fernando Jiménez Latorre. ANNEX BME Clearing Central Counterparty Entity General Conditions Group of Contracts for Energy Underlying Assets INDEX

1. General Characteristics.
2. Contracts on MIBEL Electricity - Futures and Swaps.
3. General Characteristics Index 1.1 Introduction. 1.2 Regulation applicable to the group of contracts for energy underlying assets. 1.3 Definitions. 1.4 Contracts. 1.5 Functions and services of BME Clearing. 1.6 Members. 1.1 Introduction. These General Conditions develop the Regulations of BME CLEARING, S.A.U. (hereinafter BME Clearing or ECC), forming part thereof, in accordance with Article 1.1, and establish the terms and conditions applicable to the services and functions that BME Clearing carries out in relation to the Contracts that form part of the Group of Contracts for Energy Underlying Assets and that are the object of its activity as a Central Counterparty Entity. cve: BOE-A-2014-4981

OFFICIAL STATE GAZETTE No. 114 Saturday, May 10, 2014 Sec. III. Page 36180 The Group of Contracts for Energy Underlying Assets includes the Contracts admitted to trading at MEFF Sociedad Rectora del Mercado de Productos Derivados, S.A., Single-Shareholder Company ("MEFF Exchange" or "Market") with whom BME Clearing has reached the corresponding agreement to act as Central Counterparty Entity for said Contracts and which are listed in the following section 1.4. The General Conditions are structured in separate sections, the first of which is dedicated to General Characteristics, whose provisions apply to all Contracts that form part of this Group of Contracts. The subsequent sections refer to the specific specifications of each of these Contracts. The entry into force date of these General Conditions as well as, where applicable, of each section relating to the Contracts, will be communicated in due course. As a consequence of the Registration of the Contracts of the Group of Contracts for Energy Underlying Assets in the Operations Register of BME Clearing, the parties (BME Clearing, the Members and, where applicable, the Clients) acquire the rights and obligations set out in the Regulations and in these General Conditions. 1.2 Regulation applicable to the group of contracts for energy underlying assets. The provisions contained in the following chapters of the BME Clearing Regulations shall apply to BME Clearing in the exercise of the activity of Central Counterparty Entity regarding the Contracts belonging to the Group of Contracts for Energy Underlying Assets, with the particularities set out in these General Conditions: Participants.–The regime of Members and Clients contained in chapters 2 and 3 of the BME Clearing Regulations, which comprises from Article 3 to Article 9, both inclusive. The solvency requirements applicable to Members will be those determined in these General Conditions, which may establish, in accordance with Article 3.2 of the BME Clearing Regulations, specific conditions regarding the activity of Members in relation to these Contracts. Registration.–The regime provided for Registration in chapter 5 of the BME Clearing Regulations shall also apply to the aforementioned Central Counterparty activity, comprising the regulation provided from Article 11 to Article 14 of the BME Clearing Regulations, both inclusive. Central Counterparty.–The regulation of the Central Counterparty function as well as the regime for the provision of guarantees by participants shall be that contained in chapter 6 of the aforementioned Regulations, comprising Articles 15 to 24 of the BME Clearing Regulations, both inclusive. Clearing and Settlement.–The regulation of the Central Counterparty function in relation to the Clearing and Settlement of the Contracts belonging to this Group of Contracts shall be that contained in chapter 7 of the aforementioned Regulations, specifically in Articles 25 and 26 of the BME Clearing Regulations. Default.–The default regime applicable at BME Clearing as a Central Counterparty Entity for this Group of Contracts shall be that provided in Articles 30 to 38, both inclusive, chapter 8, of the BME Clearing Regulations. 1.3 Definitions. The terms used in the regulation relating to the Contracts belonging to the Group of Contracts for Energy Underlying Assets have the same meaning as that provided in the Regulations, unless another scope or meaning is expressly established in any of the cases in which they are used. Additionally, the following terms shall apply: Payment Agent: entity that, having an account open in the payment system established by BME Clearing, has been designated by a member to carry out cash collections and payments with BME Clearing. cve: BOE-A-2014-4981

OFFICIAL STATE GAZETTE No. 114 Saturday, May 10, 2014 Sec. III. Page 36181 Closing a Contract: Carrying out an Operation of opposite sign to another that has been previously registered. Closing a Position: Closing all Contracts of a Position. Settlement Date: Day or days on which the settlement of a Contract becomes effective. The Settlement Date will be established in the General Conditions of each Contract. Expiration Date: Day on which a Contract expires. The Expiration Date will be established in the General Conditions of each Contract. Loss and Gain Settlement: Periodic cash settlement of the differences between the Contract Price and the Settlement Price, or between the last Settlement Price and that of the calculation day for Contracts that were already open at the beginning of the calculation day. After this process, all affected Contracts are considered agreed at the Settlement Price. The General Conditions of each Contract may establish that Loss and Gain Settlement is incorporated into Position Guarantees. Loss and Gain Settlement will be carried out with the periodicity established by the General Conditions of each Contract. In the absence of express stipulation, Loss and Gain Settlement will be carried out daily. Settlement Price at Expiration: Price on which a Settlement by Differences is calculated on the Expiration Date. Periodic Settlement Price: Price on which Loss and Gain Settlement is calculated and the calculation of Guarantees is carried out, with the periodicity determined in the General Conditions of each Contract. Daily Settlement Price: Price on which Loss and Gain Settlement is calculated and the calculation of Guarantees is carried out, daily. 1.4 Contracts. The following Contracts form part of the Group of Contracts for Energy Underlying Assets, whose specific characteristics are defined in these General Conditions: – Contracts on MIBEL Electricity Futures and Swaps. 1.5 Functions and services of BME Clearing. BME Clearing will carry out the following functions regarding the Contracts belonging to the Group of Contracts for Energy Underlying Assets subject to the provisions of the BME Clearing Regulations, what is provided in these General Conditions and in the corresponding Circulars: – Registration. Transactions on these Contracts shall be understood as noted in the Operations Register of BME Clearing, under the auspices of Article 12.1.B) of the Regulations, once BME Clearing has accepted the Registration Request made by MEFF Exchange. – Counterparty: BME Clearing will act as counterparty to these Contracts, in accordance with Article 19.1.B) of the Regulations. – Clearing and Settlement: The Clearing and Settlement functions of BME Clearing in relation to these Contracts are carried out subject to Articles 25 and 26 of the BME Clearing Regulations. 1.6 Members. All Members of BME Clearing shall have access to the services of BME Clearing in relation to these Contracts, to the extent determined by the class of Member to which they belong. The limits to the open positions of Members will be established by Circular, within the terms of the Regulations and these General Conditions. cve: BOE-A-2014-4981

OFFICIAL STATE GAZETTE No. 114 Saturday, May 10, 2014 Sec. III. Page 36182 Members must make available to BME Clearing, in relation to the Contracts belonging to this Group of Contracts, all information necessary for BME Clearing to attend, within the deadlines and with the formats determined in each case, the information requirements of the CNMV or Competent Authority, regarding the Operations carried out at BME Clearing by these Members. The solvency requirements applicable to Members to act at BME Clearing in relation to the Contracts belonging to this Group of Contracts will be those determined in these General Conditions: a) Non-Clearing Members on Own Account will maintain own resources in accordance with what BME Clearing establishes by Circular and which must be at least fifty thousand (50,000) euros. b) To acquire the status of General Clearing Member, interested entities must have a minimum level of own resources of one hundred (100) million euros. 2. Contracts on MIBEL Electricity Futures and Swaps Index 2.1 Introduction. 2.2 Underlying asset and types of contracts. 2.3 Technical specifications. 2.4 Settlement price at expiration. 2.5 Settlement method at expiration. 2.6 Market distortion event and energy commission. 2.7 Daily loss and gain settlement. 2.8 Registration of contracts. 2.9 Calculation of position guarantees. 2.10 Information that BME Clearing will disseminate in relation to contracts. 2.11 Assets accepted as guarantee. 2.12 Non-clearing members who are not investment service companies nor credit institutions. 2.1 Introduction. This section 2 of these General Conditions sets out the characteristics of the MIBEL Electricity Contracts, belonging to the Group of Contracts for Energy Underlying Assets. 2.2 Underlying asset and types of contracts. The Underlying Asset is notional electricity at a constant power, during all Relevant Hours, according to the Product Type, of the Delivery Period subject to the Contract at the Spanish pole of the Iberian Energy Market (MIBEL). In these General Conditions, two types of Futures Contracts are described, referred to, for the purposes of these General Conditions, as Futures and Swaps. The difference between Futures and Swaps lies in the Daily Loss and Gain Settlement and the Mark-to-Market Adjustment, as shown in the following table and in more detail in the subsequent sections of these General Conditions. cve: BOE-A-2014-4981

OFFICIAL STATE GAZETTE No. 114 Saturday, May 10, 2014 Sec. III. Page 36183 Contract Types Delivery Period Loss and Gain Settlement Settlement Method at Expiration Mark-to-Market Adjustment Futures. Annual. Yes Via Cascade it becomes Quarterly Futures Contracts. No Quarterly. Yes Via Cascade it becomes Monthly Futures Contracts. No Monthly. Yes By differences with respect to the Settlement Price at Expiration, in cash. No Weekly. Yes By differences with respect to the Settlement Price at Expiration, in cash. No Swaps. Annual. No Via Cascade it becomes Quarterly Swap Contracts. Yes Quarterly. No Via Cascade it becomes Monthly Swap Contracts. Yes Monthly. No By differences with respect to the Settlement Price at Expiration, in cash. Yes Weekly. No By differences with respect to the Settlement Price at Expiration, in cash. Yes Daily. No By differences with respect to the Settlement Price at Expiration, in cash. Yes 2.3 Technical specifications. The technical specifications of the Futures and Swaps comprise the complete description of these Contracts, whose Clearing, Settlement, and Counterparty are carried out by BME Clearing. 2.3.1 Common Technical Specifications of Futures and Swaps: Product Type: a) Base Load Product: Implies the delivery-receipt of the Underlying Asset during the Relevant Hours of all days included in the Delivery Period. b) Peak Load Products: Implies the delivery-receipt of the Underlying Asset during the Relevant Hours of the Contract on all Mondays, Tuesdays, Wednesdays, Thursdays, and Fridays included in the Delivery Period. Relevant Hours of the Contract: a) Base Load Product: From the first hour of the day (that is from 0:00 to 00:59 hours) to the last hour of the day (23:00 to 23:59 hours) of all days included in the Delivery Period. On days of time change there will be an additional hour or one hour less. b) Peak Load Product: From the ninth hour of the day (8:00 to 8:59 hours) to the twentieth hour of the day (19:00 to 19:59 hours) of all Mondays, Tuesdays, Wednesdays, Thursdays, and Fridays included in the Delivery Period. c) The hours will be named according to Spanish time (peninsular zone). Delivery Period: Contracts will have a Daily, Weekly, Monthly, Quarterly, or Annual Delivery Period, as defined in section 2.3.2 for each Contract Type. a) The Delivery Period will be the same day of the Contract for daily Contracts and for the rest of Contracts the days included in the week, month, quarter, or year of the Contract, as indicated in the following sections. b) Weekly products may be: business week, full week, and weekend. c) For Weekly products, the first day of the Delivery Period for the "business week" product will be Monday and the last day will be Friday, the first day of the Delivery Period for the "full week" product will be Monday and the last day will be Sunday, and the first day of the Delivery Period for the "weekend" product will be Saturday and the last day will be Sunday. cve: BOE-A-2014-4981

OFFICIAL STATE GAZETTE No. 114 Saturday, May 10, 2014 Sec. III. Page 36184 d) For Monthly products, the first day of the Delivery Period will be the first day of the month and the last day of the Delivery Period will be the last day of the month in question. e) For Quarterly products, the first day of the Delivery Period will be the first day of the quarter (of January, April, July, and October as the case may be) and the last day of the Delivery Period will be the last day of the quarter (of March, June, September, or December as the case may be). f) For Annual products, the first day of the Delivery Period will be the first day of January, and the last day of the Delivery Period will be the last day of December. Registration Unit: 1 MW. Contract Nominal: Will be established in MWh according to the formula: MW * No. of days of the contract * No. of Relevant Hours of the Product Type Contract Prices: In euros per MWh with at least two decimal places. Last Registration Day: The Business Day prior to the first day of the Delivery Period. Daily Settlement Price: Will be an approximation to the "market price". The criteria will be determined by Circular. It will be used for the calculation of guarantees. Settlement of Commissions: First Business Day following the registration of the Operation. Guarantees: Variable depending on the portfolio (see section Calculation of Guarantees). They will be supplied on the Business Day following the calculation date as determined by Circular. Cascade Procedure: Procedure by which, on the date established in these General Conditions, a Contract with an Annual or Quarterly Delivery Period is broken down into Quarterly or Monthly Contracts, respectively. 2.3.2 Non-common Technical Specifications of Futures and Swaps: 2.3.2.1 Futures Contracts: Delivery Periods admitted to registration: Annual, Quarterly, Monthly, and Weekly. Final Settlement Price: It is the Daily Settlement Price of the Last Registration Day. It will be calculated in the same way as the Daily Settlement Price. It is the price at which the cascade of Annual and Quarterly Futures Contracts takes place (see section 2.5.1). Daily Loss and Gain Settlement: Will be carried out daily, in cash, by differences with respect to the Daily Settlement Price of the previous session (see section 2.7). Expiration Date: Stipulated in section 2.5.1 of these General Conditions for Annual and Quarterly Contracts and in section 2.5.2 for Monthly and Weekly Contracts. Settlement Price at Expiration: It is the arithmetic mean of the hourly price of the daily market of all Relevant Hours of the contract of all days of the Delivery Period. It is calculated according to what is established in section 2.4 of these General Conditions (applicable only to Monthly and Weekly Contracts). Settlement Method at Expiration: For Contracts with an Annual or Quarterly Delivery Period via the Cascade of the Contracts, as established in section 2.5.1 of these General Conditions. For Contracts with a Monthly or Weekly Delivery Period via cash settlement by differences as established in section 2.5.2 of these General Conditions. 2.3.2.2 Swap Contracts: Delivery Periods admitted to registration: Annual, Quarterly, Monthly, Weekly, and Daily. Mark-to-Market Adjustment: Added to the Position Guarantee. Difference, positive or negative, between the Daily Settlement Price of the Session and the registration price of each operation multiplied by the registered MWs and the Nominal of the Contract. cve: BOE-A-2014-4981

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