Market risk
Resist the rise of the risk management machines
Overreliance on modern risk management systems, and metrics such as value-at-risk, can blind firms to tectonic structural market shifts. To help alleviate this problem, the use of human judgement and intervention is required, argues Vincent Kaminski
Trading OTC may be costlier than you think
Debate continues to rage about the merits of clearing, with some market observers arguing that the benefits of using central counterparties are outweighed by the precipitous costs involved. But such criticisms fail to take the full burden of over-the…
US power firms slam ISO New England over market ‘flaws’
Winter reliability at risk due to problems with real-time pricing, market participants warn
UK power firms call for quick implementation of EMR
Despite worries about UK Electricity Market Reform, market participants call on government to press ahead
Liquidity flows back into freight derivatives
Rising prices and volatility spur renewed interest in dry bulk FFAs
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Non-bank commodity traders seen as benefiting from Volcker rule
End-users will hedge more with firms such as BP, Shell and Vitol as banks face ban on prop trading, say market participants
Ex-Deutsche Bank energy traders launch hedge fund
New fund will trade financial transmission rights in US power markets
New FCA deadline for power and gas forwards ‘more realistic’, says industry
A decision to delay a deadline for brokers to review their classifications of physically settled gas and power forwards by two months has been welcomed by industry participants
Day-ahead power market coupling sees caution prevail
‘Bugs’ found in NWE day-ahead coupling tests cause exchanges and grid operators to err on the side of caution
Oil market faces tight deadline for Ice Brent protocol
As Ice prepares to shift Brent expiry calendar on December 6, Isda releases protocol to enable orderly transition of OTC market
Study casts doubt on mandatory futures insurance
Mandatory insurance for assets held by futures brokers would be extremely costly, concludes industry-backed report
Revived Dodd-Frank position limits worry energy firms
The US Commodity Futures Trading Commission is gearing up for another big fight over position limits, after its original rule was rejected by a federal court. The agency’s latest proposal, released in November, gives market participants little reason for…
Cutting edge: Valuation and optimal hedging of storage contracts in incomplete gas markets
In this paper, Magnus Wobben, Tilman Huhne, Yuri Ivanov and Sebastian Hanneken examine the impact of market incompleteness on the valuation of gas storage contracts. In contrast to prior research, their proposed valuation framework accounts for the…
Power market flux creates threats and opportunities for exchanges
Financial regulation, low volatility, flattened prices and the integration of regional markets have put European electricity trading in a state of flux. That poses threats and opportunities for power exchanges – and some industry observers say it could…
Sovereign hedging picks up as developing countries end fuel subsidies
A push to eliminate fuel subsidies across much of Africa, the Middle East and Asia is raising interest in the use of commodity hedging by governments as a way of containing social unrest. But it remains a challenge to get sovereign commodity hedging…
Energy trading firms must be whiter than white
Allegations of manipulation are particularly bad for energy trading firms, which should respond by holding themselves to higher standards
Risk management should be more than just a decoration
Despite massive investment in human capital and technical resources, risk managers failed to warn about the dangers of toxic assets and excessive leverage in the run-up to the global financial crisis. Their lack of authority is partly to blame, writes…
Acer investigated 10 potential breaches of Remit in 2012
Acer probed 10 cases under Remit in 2012, agency says, in report that sheds light on the development of monitoring regime
Tradition's Mike Anderson cheerful despite headwinds for energy brokers
Regulatory change and tough market conditions are creating deep uncertainty for energy brokers. But Tradition’s Mike Anderson remains optimistic about the business, he tells Stella Farrington
CFTC proposes 'unassailable' position limits rule
CFTC puts forward another Dodd-Frank position limits rule, generating concerns among commodity derivatives end-users
Sovereigns look to hedge fuel imports after Morocco deal
More energy importing countries are in talks about hedging fuel purchases after Morocco’s sovereign hedging deal, say bankers
Commodity investment goes back to fundamentals
The past year has not been a good one for commodity investment. Passive commodity indexes have delivered disappointing returns, while a number of high-profile commodity hedge funds have been forced to close. What is the outlook for investor interest in…
Remit insider trading rules continue to confuse energy traders
Despite coming into force in December 2011, Remit insider trading rules continue to raise questions among energy traders