Commodities

Integrated Software Solutions for Commodities Traders

One of the crucial issues facing energy traders in a volatile market place is the need to manage risk. In addition to topics related directly to commodity trading, such as Greek monitoring and P&L explanation, this risk includes a large number of variables to be monitored: credit risk, price risk, interest rate risk, currency risk and others. Businesses which had previously left the majority of this work to individual desks are now seeking to centralise their risk views and do this on a global basis. The frequency of monitoring has also increased intensively. For this reason they need systems and tools to properly evaluate and manage their trading, hedging activities and other businesses affected by market and commodity exposure. These systems should be sufficiently robust to respond to the current environment and dynamic enough to react to future changes and new requirements, as well as include automated procedures to reduce operational risk to a minimum. Any weakness in these systems can lead to significant losses and sometimes to financial collapse. Overall, commodity traders face a new era of risk management, and they need the right systems to handle this. Commodity and derivatives products for oil, coal, gas, emissions, metals, power, soft, freight and fertilisers are all managed integrally within the Sophis front to back portfolio and risk management solution. The system is designed to meet the needs of investment banks, asset managers, hedge funds, utilities and corporates. It covers a wide range of commodity types and products, from listed futures to exotic cross commodities derivatives.

Our expertise

The system is very rich in terms of risk indicators and scenarios as well as P&L reporting. The user interface allows users to view reports in real time and to manipulate P&L and sensitivities figures. The system is very flexible in terms of data management (definition of forward curve, correlation and volatility surfaces, measure unit management). It also benefits from scalability, ensuring management of high volume trading and complex instruments pricing, while customisation tools allow organisations to react quickly to new requirements.

Commodity type (financial and physical)

• Oil
• Coal
• Gas
• Power
• Precious metals
• Base metals including LME
• Freight
• Emissions
• Soft commodities
• Plastics
• Weather

Product Coverage

• Cash, futures, forwards
• Multicurrency floating/fixed swaps, formula and basket swap
• Commodity indexes: GSCI, AIG etc...
• Options on future: listed and OTC. American options
• Asian options, index options and swaptions
• Commodities baskets and commodities basket options
• Hybrid products

Find out about our solutions and technology

Learn more about our customisation capabilities

Read our quantitative team publications