The basic idea of auctioning is simple: we communicate to the market what you want to buy or sell and invite potential counterparties to participate in an auction at a specific moment in time. The Climex Auction Platform is an online trading platform where potential counterparties bid against each other to create the best price for your offer. After the auction, it is up to you to decide which counterparty you wish to do business with. As the platform is internet-based, you can participate in the auction at any moment, at any time and with any potential counterparty all over the world.
A brief summary of the auction process is outlined below. For more details on the auction process, please see our Documentation (specifically the Climex Auction Process & Procedures)
An auction consists of four phases:
1. Auction Definition
First you can customize your auction. You can:
- Define the auction conditions. This includes the product, volume, minimum price, type of payment and the underlying contract you want to use. All auction conditions are laid down in a term sheet and are communicated to the market.
- Invite (potential) participants to sign up for your auction and provide you with information on the company, project and rights involved. Based on this information you can, for instane, run a credit check. It is up to you to decide who is allowed to participate in the actual auction.
- Design the auction. Supported by our knowledge and experience you choose which kind of auction you want:
- Single vs multiple sided;
- Closed or open;
- One price vs multiple price;
- Upward vs downward;
- Spot or Forward.
- Select the time frame. When will the auction be communicated to the market? Until what time can companies sign up? When will the auction take place?
2. Market Communication
The auction is communicated to the market, and companies are invited to sign up. During this phase you can make a pre-selection of auction participants.
3. Auction Execution
The actual auction starts: all companies you have selected log in on the Climex Auction Trading Platform and engage in the bidding process. Depending on the type of auction you then select the company with the best offer.
4. Signing of Contracts
The signing of the contract depends on whether you choose a Spot or a Forward Auction.
- Spot Auctions: Payment and delivery will take place immediately after the auction. The contractual terms are laid down in the Participation Agreement and the Rules & Regulations of the auction. Central counterparty for these auctions is the APX Group. The advantage is that you run no risk on your counterparty and payment or delivery of the rights are guaranteed.
- Forward Auctions: Payment and delivery will take place some time in the future. The contract (ERPA) has to be signed after the auction. Depending on what has been communicated with the participants this can either be a fixed or negotiable contract.