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White Papers

Shared Order Book by Stefano Zambotti


The Shared Order Book



As the energy landscape evolves, market participants seek better opportunities to navigate complex market dynamics. This white paper explores how liquidity pooling enhances market efficiency, transparency, and accessibility for market participants, ultimately benefiting consumers in the energy sector. By examining the interplay between market competition, liquidity pooling, and consumer benefits, we emphasize the importance of optimizing market mechanisms for a sustainable and resilient energy future. 


The Shared Order Book (SOB)  

In short-term power markets, an order book serves as a platform where market participants can submit, adjust, or withdraw their bids and offers for buying or selling electricity. It provides a transparent view of all active orders, including their quantities, prices, and time frames, enabling traders to assess market dynamics and make informed decisions.  

The SOB is a platform where market participants of multiple Power Exchanges (i.e. Etpa, Nord Pool, Epex Spot) can access and interact with a centralized pool of liquidity. By sharing liquidity, market participants gain access to a broader range of potential counterparties and trading opportunities, leading to increased market depth and improved price discovery. This pooling of liquidity reduces the impact of individual participants' trading activities on market prices, resulting in greater price stability and reduced volatility. Furthermore, shared order books enhance market transparency, as all participants can see and have access to the same set of bids and offers, fostering a more competitive and efficient trading environment.  

For an emerging cutting-edge power exchange like Etpa, being able to provide access to a Shared Order Book (SOB) can bring significant benefits. It allows to tap into a centralized pool of liquidity, which may otherwise take time to develop independently. This access to liquidity from established exchanges can attract market participants who seek better technology, products, and services. The concept of shared order books is indeed crucial for the market as a whole and for market participants in general. By enabling innovative players to access a centralized pool of liquidity without significant market entry barriers, shared order books foster competition and innovation within the market. This allows new entrants to focus on delivering better services and performance to market participants, rather than expending resources on building liquidity from scratch. As a result, market participants benefit from a more dynamic and competitive landscape, with a wider range of trading options and potentially improved market efficiency. These aspects underscore the importance of a SOB in promoting market development, enhancing liquidity, and driving innovation in the intraday power market. 

D-60! The Last Hour – European Power Exchanges to share liquidity in all timeframes 

Allowing power exchanges to decouple and run local markets increases market concentration, limiting competition and efficiency. This monopolistic behavior has been distorting market outcomes. Fortunately, this is ending, and exchanges will not be allowed to run local markets within the Day-Ahead and Intraday frameworks.  

In this section, we explore the role of liquidity pooling during D-60 in enhancing market efficiency, promoting transparency, and facilitating access for small and medium-sized players in the renewable energy sector. 

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The integration of renewable energy sources into the existing energy infrastructure presents both opportunities and challenges in modern energy markets. Central to this integration is the need for accurate pricing signals, transparent market mechanisms, and efficient resource allocation to achieve a sustainable and resilient energy future. These elements play a pivotal role in ensuring that renewable technologies are effectively blended into the energy mix while addressing the dynamic demand of the market. 

Competition among power exchanges and market participants is instrumental in providing accurate signals for new energy investments, a vital aspect for the successful integration of renewable technologies. Particularly in the final hour before market closure (D-60), access to liquidity from all exchanges allows market participants to adjust positions closer to delivery, thereby improving market signals for renewable energy producers and consumers. Pooling liquidity among exchanges further enhances transparency, enabling market participants to observe trading volumes and prices across platforms. This transparency is essential for fostering fair competition and preventing discrimination against smaller renewable energy players, ensuring a level playing field for all stakeholders. 

Efficient utilization of renewable energy is critical for realizing its environmental and economic advantages. Pooling liquidity optimizes this utilization by facilitating connections between producers and consumers during critical trading periods such as D-60. By ensuring efficient allocation and utilization, the full potential of renewable generation can be realized, making significant strides towards a sustainable energy transition. 

Facilitating market access for smaller renewable energy players is imperative for promoting inclusivity and fostering innovation. Sharing liquidity simplifies intraday market access, reducing financial barriers and encouraging participation from a diverse range of market participants. Lowering participation costs through liquidity pooling (i.e. onboarding with only one PX suffices) stimulates innovation and market development, enriching the renewable energy landscape with novel solutions and approaches. 

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The integration of renewables into the energy mix not only promotes environmental sustainability but also reduces retail prices for consumers. This is primarily achieved through implementing more accurate pricing signals and enhancing market liquidity. The outcomes of efficient integration closely align with consumer welfare theories, suggesting that competitive markets lead to lower prices and greater consumer surplus. By leveraging market competition, consumers gain significant advantages in energy service affordability and accessibility. 


Liquidity pooling plays a pivotal role in improving price discovery and reducing transaction costs in energy markets, fostering competitive pricing, and enhancing market efficiency to maximize consumer welfare. Pooling liquidity across exchanges not only promotes market efficiency but also enhances supply security by increasing access to essential resources. This aligns with the theory of supply chain resilience, emphasizing diversification and redundancy to secure resource access. Broadening market access and reducing reliance on limited supply sources through liquidity pooling strengthens energy security and resilience, shielding consumers from market volatility and disruptions. 


The Shared Order Book (SOB) revolutionizes short-term power markets by enhancing market depth, improving price discovery, and reducing volatility. This benefits market participants with easier access to liquidity, leading to lower retail prices and increased consumer welfare. Additionally, the SOB accelerates the integration of renewable energy, contributing to a sustainable energy transition. 

D-60, the final hour before market closure, plays a crucial role by allowing adjustments closer to delivery, improving market signals for renewable energy. It fosters fair competition and inclusivity, benefiting smaller renewable energy players and promoting innovation. In summary, having All liquidity being pooled until Gate Closure Time (GTC) drives market development, enhances liquidity, and supports a sustainable energy future.