ENERGY e-TRADING SURVEY Expected Volume Increases
100% 80 60 40 20 0
The Future of Energy e-Trading Platforms Despite significant growth in recent years, energy
Source: Lab49 / Commodities Now Energy e-Trading Survey, 2012 Importantly, the study also suggests that users’
current reluctance to move more of their trading online is the quality of existing platforms. With many institutional players entering energy as an alternative investment class the expectations of e-trading platforms are growing. Institutional users are accustomed to the sophisticated electronic trading experience available on modern Single Dealer Platforms (SDPs) for other asset classes and can be understandably disappointed with the limited experience offered by relatively new energy e-trading technology. The study asked how much energy trading
would the respondents do electronically if online energy platforms offered richer functionalities and features, and 85% of respondents would shift more of their trading to e-channel under these conditions.
Richer Functionality
Would do all my energy trading electronically
13% 28% 43%
Would trade much more electronically
Would trade somewhat more electronically
Masha Filatova is Senior Strategy Consultant with Lab49 – a strategy, design and technology consulting firm that creates advanced solutions for the world’s leading investment banks, asset managers and exchanges.
To learn more about the future of electronic
energy platforms and discuss the survey in more detail contact: E:
info@lab49.com
Source: Lab49 / Commodities Now Energy e-Trading Survey, 2012 28 June 2012
www.lab49.com 16%
Would not trade more electronically
still has enormous unrealised potential as an asset class for both financial investors and corporates as well as producers diversifying their investment and hedging strategies. Further electronification of trading is inevitable given the maturing and standardization of the market under regulatory requirements. While the future of voice brokering is not assured in light of both Dodd-Frank and MiFID directives, overwhelming industry support for allowing voice interaction/execution in any definition of SEF or OTF makes it likely that the hybrid brokering model will survive and be the model of choice for energy e-trading platforms going forward. The greater electronification of energy markets
will speed up competition in online trading platforms. No one dominates the industry and incumbents are vulnerable to new players such as single-dealer platforms that have established themselves in other asset classes and evolve to offer energy trading. The greater acceptance of electronic trading in
energy markets will naturally improve the two most common concerns among execution features of e-trading platforms: liquidity and spreads. However, the emergent leading platforms will want to go further in differentiating themselves from competitors. Among other things, they will want to offer all energy products as the composition of the energy market and its participants evolves and more and more people trade multiple products. Finally, existing energy platforms are weak in pre-
trade and post-trade functionalities. If they follow the path of platforms in other assets classes (which most believe will happen) they are likely to enhance their offerings in a number of areas. These include energy research, the availability of historical data, flexible reporting, and visibility into all the user’s trading activity – some of the improvements most often called for by users. •
Increase 25% Increase 50% Increase 75% Increase 100% Increase > 100% Increase
Percent of Respondents
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