EFET report shows eSM improves OTC liquidity and reduces credit risk

Today, EFET has published a report of significant importance for the OTC gas and power markets. Conducted by PwC in collaboration with six European energy companies, the study examines the impact of moving to earlier settlement dates and what this could mean for market participants across the value chain.

Today, EFET has published a report of significant importance for the OTC gas and power markets. Conducted by PwC in collaboration with six European energy companies, the study examines the impact of moving to earlier settlement dates and what this could mean for market participants across the value chain.

The findings point clearly in one direction: earlier settlement materially improves liquidity and efficiency in OTC energy markets. By shortening settlement cycles, companies benefit from improved cash flow, reduced credit exposure, and greater flexibility in their trading activity.

Key findings include:

- Moving to earlier settlement dates significantly improves market liquidity for participants.

- The greatest benefits are observed for companies adopting daily settlement (delivery +2 days).

- While net sellers experience the most pronounced financial gains, all market participants benefit from earlier settlement.

- Earlier settlement lowers barriers to entry and eases access to the OTC market for a broader range of companies.

- Credit risk exposure is reduced as payments are received earlier.

- Earlier repayment of outstanding margin delivers a direct cash-flow benefit.

- Increased counterparty credit headroom supports higher trading volumes and activity.

Importantly, the report highlights that the EFET standard for electronic Settlement Matching (eSM) is already available and in productive use across the market. Earlier settlement cycles naturally complement eSM by enabling faster, more automated post-trade processes and reducing operational friction.

Our solution

By moving to eSM on Fidectus’ Global Energy Network (GEN), market participants can start unlocking the value tied up in their OTC trading operations today. Fidectus’ SaaS solution uniquely enables firms to benefit from earlier settlement cycles - whether or not their counterparties move at the same pace.

Through GEN, companies can automate settlement matching, reduce operational risk, and realise tangible liquidity and capital benefits without disrupting existing trading relationships.

👉 Access the report here and get in touch with us to schedule a demo.