The North American Energy Credit and Clearing Corp (NECC) offers credit protection for physical power and gas markets. NECC’s services, which are provided through the ICE trading platform as well as voice brokers, accomplish portfolio-wide credit protection and netting from initial trade through delivery and settlement. NECC manages the unique risk in physical energy markets which encompasses both financial or pre-delivery risk in forward transactions and the post-delivery risk or accounts receivable, a substantial credit risk for most physical market participants. By transacting through NECC, physical market participants realize significant benefits including:

• Access to more deals through other NECC counterparties
• Improved collateral efficiency with consolidated credit
• Full security based on risk management practices common to commodity clearinghouses

As a market-neutral credit provider, NECC enters matching contracts and fully secures every position of every participant using standards developed and used to protect commodity markets over the past 80 years. In addition, NECC offers comprehensive “netting” capability—that is the ability to offset margin requirements between physical (delivered) and financial (forward) positions in gas and power contracts with protection under U.S. bankruptcy law. Because NECC acts as a physical counterparty holding title from the initial forward transaction through delivery, it employs a seamless process that significantly reduces collateral requirements not only through consolidation (up to 80% by some accounts) but also through the netting of the outstanding value of buyers’ and sellers’ physically delivered and forward positions.

NECC is designed to fit the energy industry, embodying its uniqueness, rather than requiring the energy industry to re-invent itself to fit a pre-existent commodity market model.