COMMODITY DATA MANAGEMENT
Conclusions The relevance and importance of forward curves to today’s
trading organisations has never been greater. The newly established regulatory framework for OTC derivatives in Europe (EMIR) will have a profound impact on the marketplace, especially for the ‘financial counterparties’. This regulation mandates that standard OTC contracts are traded through CCPs and that risk mitigation standards are in place for non-centrally cleared contracts. Among other things, these require a re-working of the mark-to-market process, including the market inputs, forward curve compilations, data validation, transactional reference, data retention and revised risk management practices, as well as a review of their stewardship and management. The same is true in a number of other jurisdictions. In addition, the International Accounting Standards body has
provided updated guidelines to its ‘fair value’ techniques and reporting considerations (IFRS 13). Once again, this comes into effect at the beginning of 2013, which is no coincidence. The challenge to organisations is to ensure compliance at
a reasonable cost, while providing the flexibility needed in this increasingly complex regulatory framework when tough market conditions prevail. Excel is certainly not the answer. It requires a more structured approach to the complexities of data and curve management, which can align with the organisation’s daily processes, while offering new and improved methods of operation. The ‘buy versus build’ dilemma will always surface at this
point, and there are many reasoned arguments that can be made on both sides. However, when you consider the cost of ownership of an off-the-shelf system that is fit-for- purpose with minimal customisation, the choice may become clearer. The system
can be continuously updated and supported by the Vendor Partner for any new regulations, offers fast time to deployment, provides the flexibility for new commodities and process change,
The challenge to organisations is to ensure compliance at a reasonable cost
while offering standard architecture and scalability. Today is the time to review your current data and forward curve management systems, and to ensure that you’re making the right choice for tomorrow’s challenges. •
Richard Quigley is CEO of DataGenic, a market leader in data management solutions for the commodity markets.
E:
richard.quigley@datagenicgroup.com www.datagenicgroup.com
Commodity
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