The London Energy Brokers' Association was formed in 2003 in affiliation with the Wholesale Markets Brokers' Association (www.wmba.org.uk) to represent wholesale markets broking firms active in the Over the Counter (OTC) and exchange traded UK and liberalised European energy markets.
These brokers intermediate and facilitate bilateral contracts to be concluded between banks, trading houses, commercial enterprises, public utilities and integrated energy businesses, providing liquidity and price discovery to these markets as well as contributing significant liquidity to European exchange traded markets. The major products that they deal in include crude oil and refined petroleum products, gas, electricity, coal and emissions. More than $2 trillion worth of energy is traded through LEBA brokers each year, with data from the broker market helping to drive energy markets throughout the world.
LEBA represents the interests of its members and those of the markets in which they operate, with particular support in the areas of regulation and legislation both in the UK and Europe. Of particular importance are the relationships that LEBA has with regulators, Government bodies and other energy market associations. The Association also supports efforts to ensure the highest standards of training and competence and codes of conduct are adhered to.
The Association currently collates and publishes price indices in respect of Carbon, European Gas, UK Power and Coal and full details of these can be found in our Market Data section. In addition, the association collects and publishes frequent statistics covering the size and scope of the member firms' activities in the wholesale energy markets.
The Role of the Energy Broker
The function of a broker in the wholesale energy markets is to act as an intermediary or agent, bringing together two independent counterparties to a transaction in a cost effective way.
An energy broker does not take principal positions and does not, therefore, take the financial risks of the transaction they broker onto their own books. They act as a conduit for price information and market news. By offering current as well as historical market information, they help the client accurately price a wide range of products, whilst receiving a brokerage fee for their service.
Most importantly, an energy broker provides the market with liquidity. Business is transacted by telephone or electronically, giving access to a network of hundreds of potential wholesale counterparties worldwide. It should be noted that neither the general public nor the retail investor has direct access to the wholesale broker markets.
A key responsibility of the broker is to provide speedy execution. This requires negotiating skills and acute awareness of market practice. By giving the client a neutral and rapid service, confidentiality of sensitive price and counterparty information is assured.
With the help of modern technology, an energy broker is ideally placed to respond to the business needs of utilities, energy companies, trading houses and banks in markets that are truly global, fast moving and rapidly changing.