Chapter 5 - How Does the Market Price Work?

Question 1

How is the Market Price Calculated?

Answer 1

Using the Market Index Data (formula for which is set out in the Market Index Definition Statement (MIDS))

Question 2

Who supplies Market Index Data?

Answer 2

Market Index Data Provider (MIDP)

Question 3

Why are MIDPs appoints usually power exchanges with a larger market share?

Answer 3

These entities will have a better insight of the true “short-term” market price

Question 4

What is the Market Index Data consist of?

Answer 4

• Market Index Price (MIP)

- Market Index Volume (MIV)

Question 5

What document outlines “qualified products” in regards to Market Index Data?

Answer 5

Market Index Definition Statement (MIDS)

Question 6

How is the likelihood of a single trade affecting the final market price negated?

Answer 6

Using the Individual Liquidity Threshold (ILT)

- Has minimum volume products need to exceed

Question 7

Why does MIDS weight qualifying products/time band combinations?

Answer 7

This is to weigh the most recent data more heavily and thereby give it a more accurate picture of the short term market.