What is SGM?
As one of the most important steps taking in the liberalization of Turkish energy markets and development of energy trading, Spot Natural Gas Market (SGM) was put into service on 1st September 2018.
Thanks to SGM, designed and developed by EPIAS through use of local and national resources, Turkey has become the first country where natural gas price develops in the free market in the region. SGM is an organized market working according to a continuous trading mechanism (matching of appropriate orders instantaneously), which incorporates some advantages such as central counterparty collateral unlike the over-the-counter markets and being subject to the legislation.
With the Daily (day ahead, intraday, next day) and Weekly (weekend, weekday, whole week) products in SGM, the participants are able to balance their portfolios and provide physical optimization.
Historical Development
Frequently Asked Questions
SGM is a market where daily weighted average natural gas prices in the market are shared instantaneously and contracts from 1 through 7 days are presented and trading risk undertaken can be reduced and eliminated. SGM is among the last instruments which the Participant may use to balance itself prior to the real delivery time.
In SGM, Transmission Company ensures market-based balancing of the network by sell in case of gas surplus (positive imbalance) and by buy in case of gas deficit (negative imbalance). And the Shippers may decrease their open positions, i.e. balance themselves by closing the amounts of physical delivery liability which changes after each matching up to the closure of the contract by way of reverse operation.
Another benefit of SGM for the national and regional economies is that the price freely develops in the market is announced as reference price (GRP). Thus it would be possible for Turkey to become regional trading centre in the field of natural gas and to be able to execute agreement on basis of market-indexed price in the international long tem natural gas buy tenders instead of oil-indexed price.
While Over-the-Counter Market transactions are conducted through “bilateral agreements, those of Spot Natural Gas Market are conducted through “contracts”. As a comparison:
Bilateral Agreements:
Are special contracts made between the parties in the over-the-counter market.
They do not eliminate risk of the counter party. In other words, the seller may not deliver the product at the specified time and the buyer may not pay the price of the product specified in the agreement.
It is difficult to assign it to a third party prior to delivery.
It is not subject to special legal regulation.
It is subject to stamp duty.
SGM Contracts:
They are standard contracts made between the parties in the organized market.
There is no counter party risk. EPIAS, the central counter party, assumes role of seller against buyer and role of buyer against seller.
Physical delivery and payments are under collateral.
SGM contracts may continuously change hands until the delivery period comes (until the contract is closed).
They are subject to legal legislation established by EMRA.
They are exempt from stamp duty.
The following conditions should be fulfilled for participation in EPIAS Spot Natural Gas Market:
You should have one of EMRA licences, i.e. Import, Export or Wholesell licenses;
Legal Entity Form should be signed,
Market Participation Agreement should be signed,
You should register with the Clearing and Custody Bank,
Price of Imbalance Collateral (IC) should be deposited.
Please find below summary of the registration process whose details are given in our website (https://www.epias.com.tr/spot-dogal-gaz-piyasasi/piyasa-kayit/kayit/kayit-basvurusu-ve-belgeler/)
- First of all, you should apply BOTAS and sign STS (standard transport contract) and DUP (protocol for settlement of imbalances). (EIC code to be given at this point should be noted because it will be entered in the field of EPIAS Singular ID in the Online Registration Form. In order to prevent waste of time, you may also conduct process of application to the Clearing and Custody Bank simultaneously.)
- You should fill Online Registration Form in our website. (https://www.epias.com.tr/spot-dogal-gaz-piyasasi/piyasa-kayit/kayit/online-kayit-formu/ )
- After Online Registration, you should sign STP Participation Agreement which we shall send you as stamped by us. (Please remember that all pages should be stamped by the authorized signatories.)
- You should fill Legal Entity Form which is shared in the website written above. (Date of signing should be written in the red-framed field below the form and then printed out and completed by company seal and authorized signatures.)
- Originals or notarized copies of the List of Authorized Signatures and Certificates of Authorization should be drawn up. (In the text of the list of authorized signatures, you should pay attention that the documents should be issued to the persons who are authorized to represent and bind the company and a statement like “Authorized to follow up any procedures with EPIAS and sign documents” should take place and no “expenditure limit” should be established for such persons.)
Documents prepared in the steps 3, 4 and 5 should be sent or delivered by hand to EPIAS Correspondence Department.
The participants may perform trading for 24 hours continuously in case of daily contracts and for 8 hours in the timeline of 08:00 and 16:00 on each business day in case of weekly contracts.
The participants give orders to the related contracts for weekend, weekday and whole week as they deem to be appropriate for their business plans.
In order that the z are valid, buy or sell price and amount should not exceed “limits of market and participant” and "collateral submitted” should be sufficient.
Each matching brings liability for the participant to take delivery (buy) or deliver (sell) natural gas.
EPİAS collects collateral from the Shippers for financial risks that may occur with respect to payments arising from market transactions and imbalances. These collaterals include:
Daily Transaction Collateral (DTC) which is required to be given by the Participant in order to give offer for buy in STP. To this end, the Participant deposits collateral in its account with the Central Settlement Agency only in “cash”.
Invoice Transaction Collateral (ITC) which is a collateral in consideration of VAT and PIU debts payable by Participant arising from matching in STP. To this end, the Participant deposits collateral in types of “cash, final and indefinite letter of collateral, bearer government debt security of Undersecretariat of Treasury” in its account with the Central Settlement Agency.
Imbalance Collateral (IC) is the collateral in consideration of imbalance it will generate in the system next day and imbalance it will generate in a settlement period. To this end, the Participant deposits collateral in types of “cash, final and indefinite letter of collateral, bearer government debt security of Undersecretariat of Treasury” in its account with the Central Settlement Agency.
Financial liabilities of the shipper change continuously because of trading transactions, entry or exits in its accounts in a range of trading. So if it does not follow the notices made to it and fails to make respective payments timely, its market transactions are suspended. Market Participants should fulfill only “daily operation, invoice operation, imbalance collaterals” and System Users should fulfill only liabilities of “imbalance collateral". Significant operation times for the collateral process are as follows:
| Date | Procedure |
|---|---|
| G+1 day / 11:00 - 15:00 | G Notification of the Initial Allocation (IA) data on Gas Day to EPIAS (BOTAŞ) |
| G+1 day / 15:45 | Payment for complementation of ITC and IC complementation (EPİAŞ) / Call for complementation of Collateral (Clearing and Custody Bank) |
| G+2 days / up to 15:00 (business day) | Payment for complementation of ITC and IC (Shippers) |
| G+2 days / 15:00 (business day ) | Control of ITC and IC (EPİAŞ) |
You may notify us about any kind of requests and complaints in form of Information, Operation and Suggestion via EPIAS Help Desk platform (https://yardim.epias.com.tr/ ). For participant or personal applications not registered with the market yet, you may proceed by selection of the option “Not Participant” in the platform. Please remember that we use e-mail addresses of Emergency Support Line which are shared in our website only in case of system failures.
You may benefit from training recordings at our Youtube channel until the first training to be organized by EPIAS Strategy and Business Development Regulation.
