The TTF (Title Transfer Facility) has been in operation since November 2002 when Gasunie established this virtual trading point for natural gas in Netherlands. Initially, the TTF was only used by organisations that traded in gas for the actual purpose of consuming or supplying this gas. This is no longer a requirement.
Nowadays, it is also permitted to trade on the TTF without gas actually physically changing hands. This situation has partly arisen as a result of a spectrum of products for which gas is actually supplied days, weeks, months or even a year later. This has meant that it has become viable for financial and trading organisations to trade at these trading points, thus increasing liquidity.
The trading point's virtual character means that sale and procurement does not actually relate to gas being fed into or extracted from the network at Dutch or foreign gas entry/exit points. Gas fed into an entry point on the domestic gas transmission network may be traded several times before it is extracted at an exit point. Buyer and purchasers have to be members of the TTF in order to trade gas. Members include oil and gas companies, large-scale industrial gas consumers and utility companies.
Products traded on the TTF have been standardised in order to simplify their trading. Gas prices at this trading point are set based on supply and demand. Gas prices therefore are not linked to those of petroleum and/or petroleum-based products.
The TTF has grown considerably and is the second largest, European gas trading point behind the British (National Balancing Point) in terms of volumes traded. The TTF gas price has become an important benchmark for gas transactions across mainland Europe. Pricing differences between the TTF and other virtual trading points in north-west Europe have reduced in recent years. This is an indication of good gas market integration. It is anticipated that this trend, whereby supply and demand are matched at virtual trading points, will continue in the years ahead.