May 2013

That other ETRM: Energeya

May 30, 2013 // 0 Comments

Energeya offers a full suite for energy and commodity trading floors. This package is used in a number of companies in southern Europe, mainly Italy. One North European company is currently migrating to this package. The product that Energeye offers is based on an open source stack of standard components that deliver the basic functionality. On top of this stack is where the business logic is located that is developed in house. All of the most important commodities appear to have been covered; Each commodity comes as a separate pacakge on top of standard packages. No pricing is shown, but I would assume that it comes a whole lot cheaper than an OpenLink based applciation deployment.

Excel as trading tool?

May 22, 2013 // 0 Comments

Everyone in IT is familiar with a common problem; Excel is heavily used on trading floors, and you can’t always blame the people for doing so. But when it comes to making big decisions, especially on trading desks, the traders might have to re-evaluate their usage of Excel; arstechnica has a nice article describing the problem here: Microsoft Excel: The ruiner of global economies? The article itself refers to a list of trading losses on Wikipedia, where Excel is more than once the cause of miscalculations “An analysis of Iksil’s trades revealed that he was using Microsoft Excel excessively, making a number of formula errors that caused him to underestimate the risks of his positions.” Finally an article that I can throw at traders when they insist on using Excel instead of anything else.

Prisma

May 21, 2013 // 0 Comments

Prisma is a platform where energy companies can trade gas capacity at a large amount of interconnection points on European transmission systems.The goal of Prisma is to develop a single European platform for gas network users. PRISMA primary offers the following features to all registered users: Shippers can register for all participating TSOs through one single tool Detailed overview on all bookable network points and available capacity Auctions of firm yearly, quarterly, month-ahead and day-ahead products at cross-border and German market area interconnection points First-come-first-served bookings for primary capacities that do not have to be auctioned The platform is fairly new and on the 15th of May 2013 it issued the results of the first month of capacity auctions. Trading can be done on a web interface or via a Shipper-Service_Interface that uses an www.ebxml.org implementation made by Ponton consulting GmbH. Both interfaces support enquiries for grid and auction data as well as participation auctions. More information can be obtained from their download area: Prisma Download Center.

That other ETRM: Aspect Enterprise

May 14, 2013 // 0 Comments

Aspect Enterprise offers an ETRM that is implemented as a SaaS-platform. The platform originated as a product that first only supported oil. Currently metals, coal, emissions, freight and biofuels are supported as well. The solution offers full functionality of the whole trade lifecycle for the mentioned commodities, even including live data & news modules. From the website: We offer the only integrated, all-in one platform delivering Software-as-a-Service (SaaS) applications in the Cloud. This enables rapid deployment, controlled costs and immediate ROI for all size companies, from small trading houses to global conglomerates. .. our architecture lets trading houses quickly equip from tens to hundreds of users, all for a monthly per-user subscription. All they need to provide workers with is a browser and an Internet connection. There is no need for additional software on existing client devices, no further investment in hardware and no consequential support costs at the desktop. Fast deployment is indeed a strong point, but the biggest weakness will be that business processes need to be adjusted fully to the process that the software follows. Since a lot of customers will probably be small players and new joiners in the oil& coal market, this would not be a big challenge for these organizations.

OTC Trade validation and confirmation

May 13, 2013 // 0 Comments

After executing an OTC trade, the trade is captured and stored in an ETRM system. A lot of trading floors still have the system in place where traders are required to keep a paper blotter during the day, on which they write down each and every trade that they have done during the day. This is all getting really old, really fast. This paper blotter is validated at the end of the day against the ETRM system to verify that all trades that have been done during the day are stored for further processing. This validating is also a manual process. Some companies validate all trades, and sometimes only a random sample from the paper blotters are marked against the digital version in the ETRM system. A bit further down the line of the trade lifecycle is where the trade confirmation for OTC trades is done, which happens practically always using the Ponton box of EFET. Both parties that are involved in executing the trade on the market send the trade and all its attributes to their own Ponton box, where these systems then confirm that all attributes on both sides are identical. (Same price, volume, traders, broker, an a couple more fields). What is a really good idea is to move the electronic confirmation of the trade with the counterparty ahead in the process, and place it before the validation of the trade. The rule can be set that all trades that are electronically confirmed are automatically validated as well. This saves the confirmations desk a helluva job on validating trades. Any trades that cannot be confirmed automatically will fall through the sieve and need to be validated, changed, and confirmed again. The best point is that STP is a little step closer with this process, and auditors can be satisfied in a faster way; OTC trades that are executed electronically, captured electronically, and electronically confirmed with the counterparty, are not touched anywhere by human hands during the whole process, making it a whole lot easier to capture the exceptions from the standard rules.