Collaterals

eSett is the financial counterpart for all Balance Responsible Parties (BRPs) in the imbalance settlement. This gives rise to a significant counterparty risk for eSett, so each BRP must provide collateral to eSett as a security against the risk of the BRP not being able to fulfil its obligations towards eSett. The collateral helps to ensure that eSett can always complete the imbalance settlement in an orderly manner.

The BRPs active in Denmark are not required to provide collateral; Energinet carries the counterparty risk of activities in the Danish market area.

Here you can find an example of collateral calculation.

Collateral can be provided in the form of cash or on-demand guarantee, or a combination of these. Any cash collateral shall be held in a bank that has been approved by eSett as a settlement bank for the imbalance settlement, and in the account designated to hold collaterals.

On-Demand Guarantee templates for Balance Responsible Parties are available below.

Release of excess funds

If the amount of collateral provided by the BRP exceeds the collateral requirement, the BRP may request from eSett that the exceeding part of its collateral is released. The BRP is not allowed to withdraw any funds from its pledged settlement account or cash collateral account without eSett’s approval.

Depending on the selected settlement bank there are two alternative ways to release excess funds:

1. If the new Cash Account model is used, all funds are released to the Cash Account.
2. If the Pledged Settlement Account Model is used, the excess collateral will be released to a specified account, called “release account”. The release account must be opened in an approved settlement bank and the BRP must inform eSett about the account to be used for releasing the excess collateral via a Standard Settlement Instruction form (see instructions below).

How to add a release account (Pledged Settlement Account Model):

• Fill out this template and send it to settlement@esett.com together with a copy of the trade extract. Please also include the name, e-mail and mobile phone number of the authorized signee. eSett will then start the electronic signature process.
• Add the chosen release account in Online Service in the following way: Administration – Market Party Detail – Accounts – Request New Account Registration. Fill out the details and choose “Release account”. Do not tick the boxes for “Pledged” or “RFT Bank Account”. Send for approval.
• eSett will match the details on the SSI with the Online Service Account request and approve or reject it. Once the account is approved, it is ready to be used.