Operational risk
Mercuria deal was driven by economics, says JP Morgan
JP Morgan's global co-heads of commodities, John Anderson and Michael Camacho, say the bank's decision to sell its physical commodities business to Mercuria was not down to regulatory pressure
Robust valuation and hedging of tolling agreements and physical assets
Krzysztof Wolyniec shows how very robust valuation bounds of tolling agreements can be obtained without modelling the dispatch process or the underlying price process. This flexible method, which uses martingale duality, provides a reliable valuation…
Senators turn up the heat on physical commodities
A key US Senate subcommittee has put the spotlight on banks’ involvement in physical commodities, raising pressure on the Federal Reserve to impose tough restrictions
Official support fails to help Japan LNG contract
The launch of a new forward contract linked to liquefied natural gas (LNG) had been welcomed by the Japanese government amid hopes it might help local buyers manage their risk. But the contract has failed to take off - a sign of the challenges involved…
Enthusiasm for hedging wanes among US airlines
Airline fuel hedging was once a thriving business for bank commodity desks. But now major US carriers are showing less appetite for hedging, while non-bank dealers such as BP and Shell are also muscling in on the airline fuel hedging business. Alexander…
Mifid II commodities impact to hinge on trading venues
The evolving definition of an organised trading facility under Mifid II is worrying commodity market participants due to its critical role in determining whether certain energy trades fall under financial rules
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,…
US airline wins Dodd-Frank real-time reporting delay
CFTC no-action letter giving Southwest Airlines and its dealers extra time to report hedging trades in long-dated oil may lead to broader relief for other hedgers in illiquid markets
Looking back: El Niño boosts weather derivatives
Liquidity in the OTC weather derivatives market has suffered repeated false starts over the years, including one reported by Energy Risk in December 1997 with the onset of the El Niño weather pattern
US energy firms welcome CFTC tweaks to Dodd-Frank rules
Long-awaited move to address ‘seventh prong’ problem seen as positive step by industry groups
Vote now in the Energy Risk Commodity Rankings
Voting is open in the 2015 Energy Risk Commodity Rankings, which rank the top dealers and brokers in the global commodity derivatives market
Commodity leveraged ETFs: Tracking errors, volatility decay and trading strategies
Commodity exchange-traded funds (ETFs) and their leveraged counterparts are a significant part of the growing ETF market. Kevin Guo and Tim Leung examine their tracking performance, with a focus on the phenomena of volatility decay and realised effective…
Quant ideas: Liquidity in commodity risk management
Limited liquidity is a problem that arises frequently when managing large assets, such as power plants or storage facilities. Krzysztof Wolyniec shows how standard financial models tend to overstate the cashflows of these facilities and explains how…
Energy Risk Asia Awards: photo gallery of winners
The Energy Risk Asia Awards celebrate excellence across the region’s commodity markets. On September 23, this year’s crop of winners were presented with their trophies at a glittering gala dinner in Singapore
The secrets of successful energy trading firms
The energy trading world has seen various companies come and go over the years, including utilities, commodity trading houses and banks. Some of those firms have proven to be phenomenally profitable, while others have not. What is the recipe for success?…
Oil price fall spurs interest in trading, says panel
Financial traders such as banks are likely to benefit from a marked drop in oil prices and a rise in volatility, according to market participants speaking at a London conference
Utility firms struggle to fend off Emir clearing
Europe’s largest utilities are concerned at the prospect of having to clear all their over-the-counter derivatives trades under the European Market Infrastructure Regulation (Emir). But although there are options for avoiding clearing under Emir, whether…
Energy trading: veterans reflect on highs and lows
Celebrating Energy Risk’s 20th year, Vitol’s Christopher Bake and Icap’s Paul Newman spoke to editor Mark Pengelly about the history of the energy market and current trends on stage at Energy Risk Summit Europe in October
Mercuria appoints top team following JP Morgan sale
CME Group cuts global headcount by 5%; Deutsche oil trading heads depart; NextEra hires Barclays's Jee; EDF appoints Goldman sales head; Radhakrishnan leaves CFTC
LNG market participants shun Japanese forwards
Non-deliverable forwards on liquefied natural gas were launched by the Japan OTC Exchange in September, but the contracts are suffering from a lack of participation and concerns over pricing
Financial entity definition worries US utilities
US utilities fret their trading units could be classified as financial entities under Dodd-Frank, forcing them to clear all their OTC derivatives and face other regulatory requirements
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
Energy firms voice optimism over CFTC's Massad
The new chairman of the US Commodity Futures Trading Commission is moving to fix regulatory problems afflicting energy firms and says he will listen closely to their input on the agency's remaining Dodd-Frank Act rules. The shift is being welcomed by the…