Risk management
Houston happenings
Regulatory pressures, asset valuation and price reporting were just a few of the topic areas covered at Energy Risk’s USA conference in Houstonlast month. Here Paul Lyon rounds up some of the conference highlights
Hedging on the fly
In the first of a series of articles profiling energy users and their risk managementstrategies, we take a look at Texas-based Southwest Airlines, one of the mostactive hedgers in the aviation industry. By Joe Marsh
A poor standard
Rating agency Standard & Poor’s has recently released guidelines totest liquidity that could be an efficient probe into company finances. BrettHumphreys looks at how S&P has arrived at its calculations, asks if the liquiditymeasures are too conservative…
KWI hires SVP of operations
KWI, the London-based provider of trading and risk management software for the energy industry, today announced the appointment of Alan Somerville as senior vice president (SVP) of operations.
Liquidity, not regulation, is key to avoid manipulation, says CFTC
Regulators should avoid the temptation to implement over zealous regulation of the energy derivatives market, and instead encourage the development of liquidity, if market manipulation is to be avoided. That was the message delivered by Sharon Brown…
Price reporting is improving, says CCRO director
Confidence in the energy markets is returning partially thanks to an improvement in the price reporting practices of energy companies, according to Robert Anderson, executive director of the US-based Committee of Chief Risk Officers (CCRO).
Nymex to clear contracts on OTC oil and gas options
The New York Mercantile Exchange (Nymex) and broker Icap are set to launch an electronic market in options on oil and gas inventory statistics. The over-the-counter options will be offered through an auction process and cleared by Nymex.
Bayer signs up for SunGard Adaptiv
Bayer, the Leverkusen-based pharmaceuticals and chemicals company, has chosen Sungard’s Adaptiv trading and risk management product to support its commodity, foreign exchange and fixed-income trading operations.
S&P places focus on energy merchant liquidity risk
Rating agency Standard & Poor’s is to issue new liquidity adequacy guidelines for US energy merchants, which are particularly vulnerable to large and sudden liquidity demands related to collateral calls.
Nord Pool’s back-up
Nord Pool Clearing is the first pure electricity clearing house to obtain capitalsupport through insurance to cover defaults by its trading counterparties. Areenergy companies set to follow suit? Joe Marsh reports
Simulating spots
Abstract: The use of Monte Carlo simulation is becoming increasingly importantin energy trading and risk management. Here, Les Clewlow and ChrisStrickland present the first in a series of articles looking at the implementation of simulationtechniques and…
Heroes or cowboys?
Banks and energy companies alike are sceptical about the role that hedge fundsplay in energy markets. Are they really an aid to market stability, or is theirpresence compounding market volatility? Paul Lyon reports
The right charge
Savvy firms now accept risk is inevitable. Those that use their risk capitalefficiently outperform those that don’t. Brett Humphreys looks at alternativeinvestments to find out what the right risk-adjusted return on capital chargesmight be
Energia selects SunGard’s Entegrate ZaiNet
Energia, part of the Viridian Group, has selected SunGard’s Entegrate ZaiNet for the straight-through processing and risk management of its physical and financial power and gas contracts.
Dollar distress
Scottish Power has announced a £400 million cash windfall through its currencyhedging programme. Others have not been so lucky – but everyone is nowwaking up to currency trading. By James Ockenden
The matrix
Abstract: Portfolio-wide risk management requires a model that accounts correctlyfor the volatility of, and the correlations between electricity forward products.In this paper Kjersti Aas and KjetilK°aresen discuss a joint model for electricityforward…
Crude protection
Oil producers are divided over the value of hedging oil prices. Are investorslooking for high returns and high risk, or more stable revenues? And how muchdoes hedging actually boost an oil producer’s value? By Joe Marsh
Using a square peg
Hedging load exposures is a complex issue, and plumping for hedging the expectedvolume is unlikely to be the best solution. Brett Humphreys and RahulGill showthat sometimes, the best hedge of a shaped position is an over-hedge
Skating on thin Ice
Profits at the Intercontinental Exchange fell by more than half last year thanksto a contraction in over-the-counter revenues. Yet the exchange reports recordvolumes for its IPE business. Paul Lyon analyses the results
A fertile future
The CME is hoping its introduction of fertiliser futures will protect the industryfrom fluctuations in the price of natural gas – a vital ingredient in mostnitrogen fertilisers. But is it a case of too little too late? By Paul Lyon
Unlimited liability
Potential liabilities for European nuclear operators are set to rise sharply.Financial guarantees for nuclear operators will have to be restructured. Aregovernments and the insurance industry up to the task? MariaKielmas reports
De Vitry elected to Isda board
Benoit de Vitry, London-based global head of commodities and emerging markets rates at Barclays Capital, has been elected to the board of the International Swaps and Derivatives Association (Isda).