Opinion
Commodity derivatives lead the way for OTC reform
Enron proved merits of bottom-up evolution, not change imposed from above
Oil prices collapse: assessing the ‘known unknowns’
Predicting the future for oil prices is a losing game due to the complexity of the market. But some pieces of critical information are often widely missed, argues Vincent Kaminski, including several potential risks to firms associated with North American…
Mifid II must recognise that commodities are different
Mifid II is one of the most significant pieces of post-crisis financial reform, and threatens to engulf commodity trading firms in rules aimed squarely at financial services firms
Knowing your territory is vital for energy firms
Energy firms must operate in many different countries, with a variety of legal systems and cultural traditions. Strong knowledge of these areas is crucial if companies are to avoid being ensnared in a legal and regulatory minefield, writes Vincent…
Energy exchanges can share the burden of Remit
It's easy to see why smaller energy trading organisations become frustrated trying to deal with the demands of the European Regulation on Wholesale Energy Market Integrity and Transparency. But exchanges can play a vital role in sharing the burden,…
Energy traders ignore legal risk at their peril
Legal risk is a challenge for energy trading organisations, as it eludes traditional quantitative risk management techniques. But its effects can be just as disastrous as other risk management failures, and sometimes worse, warns Vincent Kaminski
CFTC chairman offers hope to derivatives end-users
Timothy Massad, the new chairman of the US Commodity Futures Trading Commission, seems to be steering the agency towards a more deliberate and pragmatic approach to Dodd-Frank regulation
OTC energy derivatives did not cause the crisis
Over-the-counter derivatives were blamed for the financial crisis, but now the conversation must turn to finding solutions, not apportioning guilt
Market manipulation won’t be stopped by Socrates or Spinoza
Despite all the headlines about market manipulation, business school ethics classes are not the answer, writes Vincent Kaminski. Instead, it must be emphasised that graduates have much to lose and little to gain from engaging in market abuse
Renewables in Europe: A roadmap for fundamental reform
Subsidies have proven successful at bolstering the share of electricity generated from renewable sources across Europe, but have also created some nasty side effects. Those undesirable consequences could be rectified by a more market-based approach,…
Banks down, but not necessarily out, in commodities
Investment banks are making deep cuts in commodities, but they are not departing from the market entirely
Energy markets need more than second-hand credit models
In the energy markets, models transplanted from financial markets often fall down when it comes to credit risk. This occurs for a variety of reasons, not least because energy markets are prone to seismic institutional and technological shifts, argues…
Power capacity conundrum has potential to turn sour
Differences between the EC and member states on capacity markets illustrate the struggle to co-ordinate EU energy policy and may point towards future battles
Commodity firms need a coping strategy for Mifid II
The recent agreement between EU institutions on a second wave of Mifid legislation will only increase the current level of uncertainty shaking the commodity market. Amid this backdrop, participants need to reconsider their coping strategies, argues…
Ethics and moral standards are as crucial to finance as ever
Despite the twists and turns of history, some things remain the same – an important lesson that can be found in the work of Émile Zola. His novel L’Argent shows how an erosion of moral standards can be lethal to individuals, the institutions they run,…
Unfinished rules likely to cause continued hedging woes
Post-crisis financial legislation is generating deep uncertainty for industry participants, making life difficult for companies that rely on commodity markets as a vital way of managing their risk
TXU bankruptcy holds lessons for risk managers
The bankruptcy of Energy Future Holdings – formerly known as TXU – should act as a warning to risk managers, who must be alert to excessive self-confidence and a failure to deal with unpleasant or inconvenient facts, argues Vincent Kaminski
Energy market has bright future, despite bad news
Energy risk management has come a long way and is serving up unparalleled opportunities, despite poor liquidity and a retreat by banks
There is plenty of life left in US natural gas
Sluggish prices and low volatility have provided US natural gas traders with few opportunities for trading profits in recent years. But as the past winter shows, it’s too early for them to switch off their computers and retire to the golf course, writes…
Commodity trading houses have banks on the ropes: so what?
Commodity trading houses may well be the new market heavyweights. But contrary to arguments made by bankers, that isn’t necessarily a problem
Risk managers should learn from the mistakes of others
Doing enough detective work to discover whether companies are really rotten to the core may be challenging for busy risk managers. But bad eggs usually come with early warning signs, which are easier to spot, writes Vincent Kaminski
Renewables and power markets must be brought together
Fixed feed-in tariffs have produced heavy increases in the volume of electricity generated via renewables, but their continued existence diminishes the strength of price signals in European power markets. Steffen Köhler puts forward a different approach
Commodities investing is still fundamentally sound
Commodity investors may have had a bad year, but putting money into commodities of finite supply continues to makes sense
Commodity position limits may make hedgers think twice
Dodd-Frank and Mifid II position limits could cause firms to withdraw from commodity derivatives