In early 1993 deregulation of the natural gas industry spurred the need for efficiency in conducting transactions. Westcoast Energy envisioned an electronic forum that could meet such needs in the Canadian market: an electronic exchange providing a centralized meeting place for buyers and sellers of natural gas using standardized rules. It was believed that the characteristics of the commodity, such as its fungible nature, coupled with an innovative and evolving base of market participants and an increasing market size, provided an opportunity for electronic trading of natural gas in Canada.
The vision for NGX also included clearing and settlement. NGX has operated since inception as a marketplace where NGX acts as the central counterparty to all transactions consummated onscreen. The inclusion of clearing allowed NGX to offer the marketplace the security of a clearinghouse, the efficiency of central position netting, and the advantages of anonymous trading.
NGX commenced operations on February 10, 1994. The initial product suite included contracts for physical delivery in Western Canada. The popularity of these contracts developed steadily during the next two years, leading NGX to expand the product offering. The early liquidity generated in these core products has provided the base through which NGX has pursued other product opportunities.
By the beginning of 2000, NGX had become a central feature of the Canadian natural gas marketplace. To support the increased need for exchange expertise, Westcoast took on a partner. In March 2000, OMHEX, the world’s leading provider of transaction technology, acquired a 51% interest in NGX. Capitalizing on the fit between OMHEX and NGX business lines, OMHEX acquired the remaining 49% interest in NGX in January 2001.
In April of 2003, NGX launched clearing of financial electricity products in Alberta, offering clients the ability to trade products that cleared against the Alberta powerpool prices.
While growing from 2001 to 2003, it became evident that NGX needed to bolster the clearing side of its business to respond to customer demand and increase its competitiveness with other exchanges and clearing facilities in North America. TMX Group acquired 100% of NGX in March of 2004 with a strong interest in supporting this growth.
In 2005, NGX began to expand its product offering in the U.S., adding to its system several points in the West and Mid Continent. In December 2006, NGX entered the power ancillary services space through the acquisition of the Alberta Watt Exchange (Watt-Ex).
In 2007, NGX and Intercontinental Exchange (ICE) announced a technology and physical clearing alliance to better serve the North American energy markets. The joint offering launched in February 2008 with the transition of all NGX physical gas and power markets to ICE’s screen, followed by the launch of NGX physical clearing for select ICE U.S. hubs in March.
In 2009, NGX acquired NetThruPut from Enbridge Inc. and Circuit Technology Limited and expanded its product offerings to include the electronic trading, clearing and settlement of crude oil contracts. This was followed in 2011, with the retirement of the NetThruPut trading screen and the transition of the crude oil contracts to the ICE trading platform.
In 2013, NGX launched clearing of physical power at the ERCOT market in Texas, USA. NGX expanded product offerings into physical electricity products for the first time, providing clearing and settlement of these products to the marketplace.
Throughout 2017, NGX worked with participants in the Alberta environmental carbon offsets market to bring the first electronic auctions to this marketplace. Buyers and sellers were able to access concentrated liquidity and price transparency on NGX’s proprietary auction software (NGX TradePath).
In late 2017, NGX was purchased by the Intercontinental Exchange or ICE. ICE’s vision is to bring NGX’s efficiency and physical delivery expertise to new asset classes and global markets, while continuing to provide the most liquid and reliable physical energy markets in North America.