Energy Traders Get Tech Savvy

Terry Flanagan

The rules of the game are changing for energy derivatives, as the Dodd-Frank Act and the slew of regulations it’s spawned have maximized the need for data management and communications.

“The requirements of the Dodd-Frank Act will have a substantial impact on the systems used by utilities, oil and gas companies and other energy-related organizations,” Louis Caron, executive lead, global energy commodity risk at RiskAdvisory, a division of SAS, told Markets Media.

One of the most sweeping changes is the need to report transactions to centralized swap data repositories (SDRs), which will cause energy firms to revamp their trading operations.

“Under Dodd-Frank, firms need to aggregate transactions into a single repository,” Caron said. “That will be a challenge for a lot of clients that maintain multiple, siloed systems for trading gas, physical crude oil and other commodities. It will necessitate creating new data fields to identify whether the counterparty is an end user, swap dealer, or major swap participant.”

RiskAdvisory’s BookRunner platform provides deal capture for energy commodities, including physical and financial position reporting, risk analytics for market and credit risk management, and reporting.

“BookRunner is a commodity trading and risk management app,” said Caron. “For large, complex energy portfolios, it offers a complete front-to-back office risk management platform.”

The system has benefited by its integration with SAS, including analytics, data integration, and business intelligence tools.

“The analytics that SAS produces are a natural extension to BookRunner,” Caron said. “We’ve been able to enhance BookRunner using the SAS platform, which is a substantial advancement over competitors that are more traditional black box products.”

RiskAdvisory offers SAS Risk Dimensions, which provides a range of advanced modeling techniques to measure and monitor risk factor associated with energy assets and contracts.

BookRunner complements Risk Dimensions by providing a front-office transaction management and deal capture solution, for management of risks associated with physical and financial contracts.

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