Energy Risk &
Trade Management: Hand-in-glove with Trayport’s GlobalVision Trading GatewaySM
A
greater sensitivity to risk in global energy markets has coincided with a rise in demand for Energy Trading and Risk Management (ETRM) systems. ETRM is a category
of software applications, architectures and tools that support the business processes associated with the trading of energy commodities. Increasingly more important as energy markets liberalise, ETRM solutions play a vital role in ensuring the smooth, accurate and speedy flow of trades in this market. The companies that have previously used in-house ETRM
systems to facilitate energy trades are increasingly moving to more sophisticated ETRM products. The development of the market, increased liquidity, the need to report and the need to quantify risk, means there is now a stronger requirement for more sophisticated, industry standard, real-time risk management systems to be put in place. The question is not only what type of ETRM system to use, but also how best to implement and configure the system for maximum returns within an acceptable timescale. Companies must implement not just their ETRM systems but take into account their entire order and trade workflow.
Business Problem The ETRM market is a fragmented
. By Anthony Bordin
GlobalVision Trading Gateway – How Does it Work? GlobalVision Trading Gateway has become a necessary tool
for many professional energy trading organisations. With Trading Gateway users can view and execute like prices over multiple markets using one single screen. This is done by cleverly mapping similar contracts from different marketplaces to a local master database. With all local trading using your local database, traders can view all orders for similar contracts in a single stack; trade spreads based on the best prices in the market, and make use of advanced API interfaces. The product has grown in importance to such an extent that the bulk of the German electricity derivatives market volume now uses Trading Gateway.
Interfaces, Mappings & More Interfaces Aside from the increased market and price visibility, Trading
one, with numerous providers offering solutions tailored either to working with the regulations of specific regions, or specific end-user requirements. With the added benefit of security and reduced risk associated with purchasing an ETRM system, organisations can expect to invest a significant amount of money (over US$500,000) and endure a long wait (typically six months or more) to enjoy the fruits of that investment. Aside from the implications around lengthy implementation times, there are other potentially costly factors at play. When trading in energy commodities, there is a significant
The question is not only what ETRM system to use, but also how best to implement and configure the system ...
Gateway’s advanced interface lets companies take both matched and unmatched orders out of the system to third- party systems in real-time, quickly and easily. Trayport has been working with clients and vendors that operate in other parts of the ‘order life-cycle’ to help companies make decisions faster and more accurately both pre and post- trade. Technical analysts are using the instrument from the local master database (mapped from multiple marketplaces), via the API, to chart
products to decide the optimum time to buy or sell. The application with most traction has therefore been in linking Trading Gateway to ETRM solutions with a pre-mapped master- set of trading data including orders, trades, counterparties and instruments. The business benefit in linking these two systems is the ability to get error free trades into your ETRM application. The widespread use of local mapping information on Trading
benefit to be enjoyed from using interfacing solutions that pass information to or get information from your ETRM system. Unfortunately, due to the sudden growth of electronic screen trading in this area, users will note that similar contracts on competing marketplaces have different ID’s making it very hard to associate like-for-like without certain knowledge. Mapping equivalent contracts to each other is a time consuming operation. As the market grows and exchange offerings expand, this time investment also grows exponentially. A hidden cost? Perhaps not, but certainly one that could be reduced. The interfacing solution that can help achieve that efficiency comes in the form of Trayport’s GlobalVision Trading GatewaySM
tool, which has fast become an essential part of the modern day energy trading system. 34
Gateway as the central repository for all traded instrument ID’s (and associated information) has led Trayport to release an industry standard ‘Gold Mapping’ database. Frequent updates are released by Trayport as exchanges and brokers update and release new products. The fact that clients are requesting add- on features linked to ‘Gold Mappings’ as pre-configured is a sign of the industry’s acceptance. Prior to Trading Gateway, ETRM vendors and their clients
used bespoke API connections to automatically enter trade information for brokers and exchanges. Companies with Trading Gateway quickly connected it to their ETRM systems when they realised it was cheaper to interface to an internal system with its own local mappings, rather than have idle resources that needed to be quickly commissioned when a broker or exchange moved to new software versions or added products.
worldPower 2010
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