The Commodity Trading & Risk Management Landscape
This special CTRM supplement comprises four specific areas of commodity business and technological expertise:
1. Trading, Deal Capture & Reporting 2. Valuation, Optimisation & Risk Management 3. Data Management 3. Supply Chain & Logistics Management
TO KEEP UP with today’s commodity market trends for growth and sophistication, traders and risk/asset managers need to focus on both operational practices and technological capabilities to achieve better performance. Recent market volatility and the encroachment of new regulatory and
reporting requirements has created a growing demand for a more effective and flexible commodity trading and risk management framework and the systems and software applications that support them – the CTRM systems. Market volatility and complexity has created a growing demand for CTRM
systems – the category of software applications, architectures and tools that support commodity business processes. Trading, investing, and managing assets and liabilities in today’s commodity sectors now requires sophisticated, robust, adaptable and scaleable technology. Traders and managers in this industry transact in multiple commodities, multiple markets, multiple instruments, multiple assets, multiple currencies, and utilise multiple transportation methods. They make their buying and selling decisions by constantly tracking and analysing price trends, price correlations, supply/ demand imbalances, physical system constraints, weather forecasts, and a plethora of other factors, both internal and external to the company. Firms that lack the capacity for straight-through-processing for managing commodity derivatives, for example, are exposed to operational risks resulting from inadequate automation and controls. Using new technology to automate key aspects of the commodity trade life-cycle of is therefore critical in the following areas:
• An integrated and scalable infrastructure for multi-asset commodities processing.
• Flexible workflow management to support complex business logic.
• Superior real-time connectivity to electronic matching, confirmation, and reporting services.
• Real- or near-time reporting & controls at any level of trade detail. • Buy-side solution adoption to ensure STP across all counterparties.
Fundamentally, CTRM technology is designed to provide the many firms
without the proprietary resources, skills, or appetite to develop their own technology to transact and manage commodity business. Accordingly, CTRM has become an integral part of the commodity trading landscape as providers have developed ever more complex systems to manage commodity assets and liabilities. The CTRM product landscape has always been somewhat fragmented,
with a large number of product vendors servicing component processes of the commodity trading value chain. Traditionally, many have focused on the financial trading side, providing STP for paper trades while offering
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