According to the European gas market model, a well-functioning, competitive, liquid and transparent gas market is a prerequisite for ensuring security of supply. In each balance area, market participants must be able to trade both through bilateral contracts and on the gas exchange.  

Standard trading conditions apply to traders on the gas exchange (including product delivery time). In addition, the contracting parties never know who the actual seller/buyer was, because the counterparty to the transaction is always the exchange. Since settlement also takes place with the exchange, there is no counterparty risk in this type of trading. However, trading on the exchange involves costs according to the price list of each exchange. Exchanges also offer additional services (reporting of purchase/sale transactions in accordance with the REMIT Regulation, balance administration, financial instruments, etc.). 

Trading and price formation on different exchanges can take place based on different mathematical algorithms. While on power exchanges the price of the next day’s products is determined at auction based on marginal pricing, on gas exchanges the principle of continuous trading is used. In the case of continuous trading (similar to a stock exchange), a transaction is concluded after making each offer by a suitable counterparty (matching), which means that each transaction has its “own” price. 

The gas exchange in Estonia was launched at the beginning of July 2017. The common balance zone of Estonia and Latvia is also covered by a common gas exchange price area. The gas market covering the Baltic States and Finland is managed by EEX/GetBaltic. 

According to the agreement between the gas system operators of the three Baltic States and Finland, the allocation of gas transmission capacity between countries also partially applies an implicit principle, in which part of the capacity of the entry and exit points of the gas systems is given to the gas exchange for distribution. This allows the gas exchange to combine market areas to the extent of transmission capacity, and for the customer, the gas exchange price also includes network services in cross-border transactions. For example, an Estonian market participant can purchase gas from Lithuania on the gas exchange without having to organise the transport of gas from Lithuania to the Latvian/Estonian price area. 

Information about transactions in the Finnish-Baltic gas market is available on the EEX/GetBaltic website