ETRM Has Evolved into A Smart Tool to Manage Energy Trades and Risks in New Market Structure

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Energy markets and participant pool is changing. Financial participants and banks are being replaced by trading houses or physical traders because they have major physical and operational support. The new energy trade and risk management solution is expected to offer and support business analytics that spot opportunities, include active compliance and analysis elements and allow observance to specific legal initiatives, while incorporating with accounting system. In addition, the liquidity & collateral management are critical concerns in this new market structure.

Commodity price is volatile and consists of a massive portion of total production cost. ETRM [Energy Trade and Risk Management] is a software, which helps in commodity trading and risk management. The solution can efficiently handle physical and financial trading of commodities like energy, oil derivatives, natural gas, soft commodities, crude oils, plastics, and metals.

What is Energy trade & risk management system?

It is a system, which is related to handling complex energy trades and/or tangible assets portfolio. It is a comprehensive front-end to back-end process that helps to manage physical and financial energy trade contract.

End-to-end support includes

  • Capture deal and price management
  • Risk reporting
  • Scheduling & logistics
  • Valuation
  • Position management
  • Accounting
  • Optimization
  • Regulatory report
  • Settlement

A strong energy trade & risk management system offers you precise and clear picture of intricate energy portfolios, market positions, and price exposures, which can be financial or physical in nature. Portfolios and trades exposed to the market needs to be managed throughout the contract as positions are vulnerable to price fluctuations.

Energy trade & risk management system functions

  • Helps manage complexities associated with portfolio, trade, position, and hedge.
  • Manages complete trade lifecycle right from deal capturing to risk management to settlement & invoice.
  • Entities with market exposure split system processes into front, middle, and back office functions.
  • Managing the physical side of energy commodity is very challenging to handle efficiently because different methods are applied to manage as per their storage, scheduling, transportation medium, and delivery.

Today, energy trade & risk management systems have developed and evolved into central nervous system for firms. With asset optimization simulations impeccably mining contract and transaction details from refined accounting system capable of holding broad complex assets details related to pipelines, power plants, networks, and long-term contracts, this system has turned into a useful evolving tool.

It is certainly going to occupy a central position in marketplace for trading houses, power plants, pipeline operators, and energy market participants.