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Energy

Model:

One to One

One to Many

Many to many (many variations here)

Many to One

Also known as

Bilateral

Market maker

Multilateral matching: unregulated exchanges, consortiums, broker-assisted.

Nymex, Nordpool, APX, EEX, UKPX, LPX, new UK exchanges

Who bears credit risk?

Both parties

Market maker and counterparty

Both counterparties, but not the exchange or the broker

The exchange

Take title?

Both parties

Market maker and counterparty

Both counterparties, but not the exchange or the broker

Both

Revenue by commission or bid-offer spread?

Spread

Spread

Commission (transaction fee), subscription, or other method.

Membership fee, clearing fees.

Anonymity before trade?

No

No

Yes

Yes

Ownership

Not applicable

Market maker

Varies: third-party neutral ownership, the exchange, the broker, or participants

The exchange, but can also be owned by participants

Motivation

Customization. Privacy. Longer term deals.

The more platforms their prices are distributed to, the more liquidity.

Online platform as a complement to brokering, or to facilitateprice matching.

Reduces transaction cost and credit risk. Increases price transparency and liquidity.

Drawbacks

Not transparent without third party aggregators

Many traders uncomfortable trading with just one company - the market maker.

Does not remove credit risk. Not as transparent as one may think.

Usually standardized products only.