Section 28 in Central Electricity Regulatory Commission (Power Market) Regulations, 2010
28. Risk Management by Power Exchange.
- (i) The Power Exchange shall adopt best practices while formulating prudent and dynamic risk management processes based on the changing risk profiles of the market.(ii)The Risk management Committee (RMC) shall review the risk management framework and process of the Power Exchange on a six monthly basis in January and July each year. The RMC report shall be submitted to the board of directors. The decision of the board of directors on the subject along with the RMC report shall be submitted to the Commission within one month of the risk management review process and not later than end of February and August respectively.(iii)The Members' risk shall be monitored constantly and margins shall be collected at appropriate time for efficacy of risk management.(iv)Members shall be subject to margins on a gross basis across clients by the Power Exchange. There shall be no offsetting of positions of different clients of a member in the same market.Illustration. - In case of an Electricity Trader member, if his client A has a buy position of 50 Mwh and his client B has a sell position of 50 MWh in the same contract, the net position of the member in the contract is to be taken as 100 MWh. The buy position of client A and sell position of client B in the contract will not be netted. It shall be summed up to arrive at the member's open position for the purpose of margin calculation.(v)Members should, wherever applicable, have a prudent risk management and timely margin collection system from their clients. The quantum of margins collected by members from client shall be at the discretion of the members and as per bye laws of Power Exchange.
