The Challenge

G2X Energy is a privately-owned company based in Houston, Texas that develops, owns, and operates production facilities that convert natural gas to methanol. While sophisticated and vertically integrated globally, G2X is also a relatively small shop; efficient use of available resources is critical to their continued success.

G2X’s incumbent CTRM configuration did not integrate with many of its other business-critical processes required for transaction reconciliation. The company had installed several service extensions and modules that enabled the team to perform the necessary calculations and reporting, but the workarounds necessitated an inefficient divergence from established workflows. This resulted in sub-optimal performance, excessive manual interventions and repetitive processes, and strained resources that created bottlenecks on key business days. Month-end account reconciliations took much longer than necessary, risked data-entry errors, and incurred significant overtime costs.

Key Results

Overtime costs reduced, as the new platform automated data entry.

 

Employee morale and work/life balance improved with less stressful reconciliations.

G2X’s IT staff now focuses on value-adding tasks while Value Creed monitors and manages the company’s CTRM application 24/7/365.

Advanced data streaming creates a wide range of workflow control options establishing greater flexibility and efficiency.

Value Creed Solutions

Advanced analytics and problem solving

Value Creed built and integrated a new decision engine that incorporates G2X’s business process rules and delivers customized calculations and sophisticated analytics. The more comprehensive and current view of the company’s position engenders better decisions.

Automatic data import and entry

Value Creed implemented a process for collecting purchase, sales, inventory, and other vital information from various sources and flowing it into downstream accounting, finance, and other business-process platforms. Automation reduced errors and expedited reconciliation and reporting.

Flexible and scalable workflow

Value Creed integrated data sources and business process platforms with G2X’s new CTRM platform, expanding the company’s capabilities and giving the team more options regarding how it performs critical business tasks. This flexibility ensures G2X CTRM functionality will grow with the business while making data, reports, and insights accessible to decision makers.

Value Creed Services Mobilized:

Expertise On Demand

An experienced team and sophisticated technology combine to deliver feature-rich functionality and operability. You pay only for the services you need when you need them.

Achieve More With Value Creed’s CTRM Expertise On Demand

We help IT Teams worldwide integrate, extend, customize and drive more value.

Don't let your CTRM software be the roadblock to innovation. Let's Talk!

The prevalence of having financial commodity positions cleared through a broker has elevated the amount of collateral margin that companies may have tied up in broker accounts. Margin balances can represent a significant liquidity challenge for companies, thus warranting strong controls and reconciliation. Visibility into and automation of margin calculations for current and prospective positions can not only help streamline internal processes, but also help companies maximize the interest they earn on their cash. Please read on to hear how our technical solution can help your business optimize your margin.

In response to a variety of issues contributing to the 2008 financial crisis, the Dodd-Frank Act created several new regulations around swap and derivative clearing.  With these new regulations, the importance and usage of clearing systems and posting margin was significantly enhanced. The CME  serves an important role as a clearing agent to its members and their related clients.

Use Case: Clearing Margin Positions Via An Exchange With Span Calculators

Clearing and margining positions via an exchange involves the parties within a transaction making margin deposits with the clearing house (CME in this case). The margin deposits help cover a counterparty’s credit risk to the cleared transactions. The amount of margin required for a given position or portfolio can fluctuate with the ever-changing pricing and volatility in specific markets, but generally equates to 3-12% of the notional value of a position. Maintenance margin on nearby NYMEX futures on natural gas and crude oil are around 4-5% of notional value. The interest rates paid on margin balances are typically quite low at well under 50 basis points. A counterparty may be asked to make additional margin deposits or may be entitled to reduce their margin balance on a daily basis with any significant changes to market pricing or volatility.

The CME has developed a variety of tools to enable the automation of a counterparty’s margin calculation. The CME ‘SPAN Calculator’ produces the initial and maintenance margin requirements of a portfolio with the inputs of position volumes. The Value Creed team has experience integrating CTRM positions with the CME SPAN Calculator and enabling rapid reconciliation and visibility into these calculations. This solution enables automation and streamlined processes including:

  • Downloading clearing broker statements
  • Automates calculation of margin amounts against CTRM positions – existing and prospective
  • Facilitates a reconciliation between broker statement and the CME SPAN calculation
  • Streamlines the business process for resolving margin disputes

This solution provides the tools to facilitate a rapid reconciliation of CTRM positions to the margin requirements requested by a clearing broker. The benefits of using this solution include:

  • Avoidance of losing interest on carrying excessive margin balances
  • Verification of margin requests swiftly before sending additional margin
  • Visibility into future changes in margin against prospective positions. Thus, enabling margin liquidity forecasting and planning.
  • Reduction in effort and time to reconcile margin requirements to a broker statement

Contact us to hear more about how Value Creed can streamline and optimize your margin liquidity and related processes! Sales@valuecreed.wpengine.com