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We highlight how a global trading house wanted to change the methodology to calculate the portfolio exposures from one currency to another that was offered by the standard ETRM.

CHALLENGE

CALCULATING YOUR PORTFOLIO EXPOSURE

The energy industry is experiencing a rapid transformation with North America, Europe and Asia evolving as an interconnected global Energy market. Commodity prices are tying major global energy participants to each other with the European and the Middle Eastern trading hubs being heavily correlated.

However, as volatility is still common in the energy markets companies are now also dealing with a different set of risks.

Value Creed’s team has helped one of their global energy trading houses to overcome this challenge by understanding their current business process, analysing the implementation of their trading business in their ETRM system and then tweaking it to deliver the desired outcome. 

CURRENT AND EXPECTED RESULTS

If you observe the above the case there is a 1.1k approx USD exposure difference

SOLUTION AND OUTCOME

Value Creed implemented a solution on top of an existing ETRM valuation engine to accept multiple currencies to value the portfolio, new rules for the exposure calculations, stored the results and displayed the new real portfolio value.

The real insights give power to the business to plan an action and know when to implement it. The client has achieved:  

Real Portfolio visibility

The implemented solution gave the trading desk real visibility of their portfolio exposures.

Adequate Risk Management

The implemented solution helped the Derivatives and FX team to create more sophisticated hedging strategies.

Real visibility for accounting and compliance

They were able to report the correct P&L by entities and eliminate the FX differences.​
Recommended: CTRM Case Studies

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Alleviate Failures and Maintenance Cost

Failed overnight report generation and sub-optimal trading-day performance cost liquid energy companies money and force them to allocate in-house IT experts to manual problem-solving when they could be performing higher-value tasks.

Often problems arise after implementation of a platform into an energy trading firm’s run/operate phase. Data may be corrupted, users may encounter problems creating the workflow they need. Reports may not run or may be incorrect because of missing price, quantity, or other information.

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Correct, Current Data Drives Optimal Strategy and Decisions

Value Creed’s 3-Point Program

CTRM users need timely answers to several questions to maximize revenues, contain costs, and coordinate tactics: inventory reconciliation, exchange trade documentation, tax rules, infrastructure scaling, report access, and more. Value Creed manages clients’ CTRM platform performance with three critical services:

Overnight Proactive
Monitoring

A dual time zone approach to ensure end-of-day processes complete successfully and overnight reports are ready before the next trading day begins

Trading Day Reactive
Resolution

Quick response to data and coding issues that arise during business hours, assessment of their criticality, and mobilization of technical and functional experts to resolve the issues

24/7 Cloud
Optimization

Including regular health checks to ensure guaranteed 99 percent uptime, lower total cost of platform ownership, and reliable operation and performance

RightAngle Is Critical; Keeping It Running Is Challenging

Value Creed’s One-source Solution

Value Creed’s managed service plan alleviates many of the problems plaguing midstream energy companies:

RightAngle expertise is difficult to find and even harder to hold onto. Your competitors are always willing to offer your in-house employees a better offer.

There is no such thing as a minor issue when it comes to RightAngle efficiency and workflow. When something goes wrong, your whole business suffers and you need immediate response.

Internal processes and integration requirements, advanced software, and convoluted vendor relationships make it difficult to optimize and customize RightAngle workflow.

RightAngle is a sophisticated and finely tuned specialized platform. They require infrastructure expansion in order to scale operations, and more functionality means more costly maintenance.

The Value Creed Difference

Leveraged Technology, Expertise, and Customer Service

Value Creed has created a video describing the everyday challenges liquid energy trading companies face with and how our managed services can take away the headaches involved in maintaining their RightAngle reporting and maintenance functions. Watch the video for more information.

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Get the Most from Your System

Liquid commodities firms rely on dedicated CTRM software to manage most of their financial transactions, deliveries, and reconciliations. To ensure these companies receive the full benefit from their liquid-focused CTRM platform, Value Creed has created a series of videos covering the platform’s main functionality so users can avoid issues and keep their system performing optimally.

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Best Practice #1: Default Fees

The first video module explains how the software can be set up to ensure timely and accurate calculation of broker fees and commissions during trade entry and execution. The fees can be captured and invoiced automatically based on the commodity, exchange, and other variables to eliminate data-entry errors and time wasted on repetitive tasks.

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Best Practice #2: Curve Calendar

Video two shows how to alleviate mismatches in calendar dates within price curve and delivery period categories that create miscalculation of pricing and trade timing. Solving the issue will eliminate errors in field propagation and delays in closing end-of-period accounting records. 

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Best Practice #3: Trade Scraps

Watch the third video to learn how to create new trade templates that capture the same details across fields: company name, counterparty, payment terms, strategy, contact, and more. Enter data once, save the form as a scrap, and populate the same fields in other forms during trade capture, saving time and minimizing input errors.

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Best Practice #4: Quick Reporting

Our fourth video shows how smart data retrieval includes accessing and scraping information from databases that contains specific criteria. Liquids-focused CTRM platform users can expedite the generation of reports they need to generate repeatedly by saving criteria for use every time they need to create a query to fetch the data.

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Best Practice #5: Transfer Management

The last video in the series explains how the CTRM software’s default mode keeps multiple legacy records of transfers in “Moved” status and includes them in risk reports. These records are maintained even after the deal expires. Marking the transfers “Complete” maintains the physical trades’ lifecycle.

Value Creed’s Managed Services Solution

Comprehensive Liquids-Focused CTRM Support

Value Creed offers holistic management, monitoring, and issue-response services to keep midstream companies’ systems at full functionality while preserving in-house IT staff for more pressing tasks. Our service includes:

Overnight Proactive
Monitoring

 to ensure end-of-day processes run successfully.

Trading Day Reactive
Resolution

of data and coding issues that arise.

24/7 Cloud
Optimization

for guaranteed 99 percent uptime and lower cost of operation.

Put These Liquid-Focused CTRM Best Practices To Work For Your Platform

There’s No Such Thing as “Standard” Risk Management in Commodities

Companies Need Expanded, Specialized Credit Functionality

All traditional CTRM softwares come equipped with credit risk management modules that give commodity- and energy-trading organizations basic, credit functionalities. They all work pretty much the same way. Standard functionality allows users to monitor and manage counterparty contracts and set credit limits and secure collateral arrangements. Unfortunately few stakeholders in commodities markets perform only basic credit risk tasks and their needs extend far beyond the standard functionalities even the leading CTRM platforms can deliver.

Evolving Risk Requires Extended CTRM Functionality

In a world rife with geopolitical upheaval, supply chain disruptions, whiplashing prices, and increasing security challenges, commodity suppliers, brokers, distributors, and investors require a comprehensive solution for managing credit risk. Value Creed has developed a suite of extensions as part of their Expertise on Demand solutions that can be implemented within leading CTRM systems that both enable more robust credit, valuation, and counterparty analysis and leverage multiple data sources to perform enterprise-level forecasting for evaluating risk based on clients’ specific business models and objectives.

Value Creed’s optimized custom credit query processes can improve execution time by 25% to 40%

Value Creed

Credit Functionality Beyond What the CTRM Platform Provides

Value Creed enables more robust credit risk analysis, critical in an era of supply disruption, geopolitical upheaval, ransomware, and volatile pricing:

TraditionalCTRM

Value Creed brings its expertise and experience to bear to ensure the credit risk functionality extensions and adjustments are incorporated into all the company’s processes. We undertake comprehensive testing and scenario development to demonstrate that all data calculations are correct and current so all applications are performed using a single accurate, uniform version of the company’s positions:

CTRM Extending Credit Functionalities Testing for Key Reports

Value Creed’s CTRM Credit Functionalities Testing Covers

  • Balance of month
  • Available credit
  • Credit violations
  • Total expected exposure
  • Mark to market

Our Proven Process

Interview credit analysts, traders, and other end-users of the CTRM platform to determine what additional functions they would like to gain. Uncover any instances where data gaps may exist or external platforms do not integrate with the CTRM credit risk management module.

Determine the best approach to satisfying these requirements – table extension, data integration, decision engines, etc.

Write custom code and queries to enable precise data retrieval, expedite quantity and position updates, and speed query performance by 25 to 40 percent. These upgrades may also point to areas the CTRM platform may be adjusted to work smoothly with credit data sources.

Comprehensive systems testing and adjustments to show that changes are accessible by all platforms and data are consistent, accurate, and up to date. Value Creed then demonstrates the new functionality, conducts user acceptance testing, and initiates go-live with ongoing support.

 

Dependable, Customer-first Solutions

Commodity-trading enterprises rely on Value Creed to deliver credit risk management extensions and other CTRM upgrades online quickly and efficiently. Our dedicated team of experienced professionals and our deep understanding of sophisticated technology provides the specialized insights their IT departments need to make the most of their budgets and in-house skills.

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Simple, interactive interface and custom views facilitate decision-making

Kibana, Elasticsearch’s dedicated data visualization dashboard software, is specially equipped to help commodity trading
organizations view log summaries and other data simply and efficiently.
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Why Kibana?

Value Creed has created a video summarizing Kibana’s many advantages and benefits in the CTRM setting:

  • Summaries and granular data documenting CTRM transactions, events, anomalies, and warnings.
  • Data delivery via an intuitive interface and statistics displayed in user-friendly pie charts, bar graphs, and other visualizations.
  • Powerful analytics permitting backward comparisons of performance metrics and a suite of timeframe and keyword filters.
  • Automatic data collection, storage, retrieval.

How Kibana Works for CTRM IT Teams

Kibana makes the most of the data organizations generate or stream from third-party sources. A data-collection engine retrieves the information and flows it to the Elasticsearch database. Kibana interfaces with the data storage component pulls the selected data, and displays the pertinent relationships:

Powerful KIBANA Benefits

  • Interactive reports
  • Real-time summaries
  • Systems, application, and server log metrics
  • CPU inventory and load
  • Keyword-filtered log details

Why CTRM Users Are Considering Kibana as a New Approach to Log Report Analysis

  • Intuitive user interface
  • Real-time summaries
  • Interactive reports
  • Clear data visualization
  • Customizable dashboards
  • Powerful filters

Value Creed services work seamlessly with Kibana to help commodities companies derive optimal strategies through the power of data reporting and analysis. to learn more about the power of Kibana and Value Creed’s CTRM products, contact us today.

Ready To Get Started

Let’s Us Know

A diversified energy company based in New York needed to upgrade its CTRM, but had no experience with major technical software upgrades in the past to help streamline processes or enable faster system performance.

After encountering barriers and challenges during the process, they turned to Value Creed for technical support of the CTRM system upgrade. Value Creed delivered the fully functional upgrade within three months.

Key Results

Full Regression Testing

Complete run-through performed before business user testing

Only 3 Months

Successful CTRM upgrade with fully functional go-live testing

150 Class Events

Performed remediation of all class events in upgrade platform>

CTRM Upgrade Challenges

Traders and risk managers in the commodity industry have relied on traditional software, mostly spreadsheets to help them run their operations. As the dynamics of the market change, oftentimes this method no longer meets the needs of the organization. The company wanted to improve its efficiency in managing a commodity business by providing a single CTRM system for the front, middle and back-office employees to monitor and complete their work. With the loss of a key developer and limited support of its outdated CTRM, the company ran into one hurdle after another. It could not reduce long-term infrastructure and support costs while having high data security risks. In addition, it was not feasible to train another resource due to the complexities of the software. As a result, the CTRM upgrade was repeatedly delayed.  When the company was quarantined during the COVID 19 pandemic, they saw an opportunity to complete their CTRM upgrade within three months, as long as they had the right partner. 

They turned to Value Creed with these expectations:

They turned to Value Creed with these expectations

  • Control resource costs while helping with the upgrade 
  • Full vendor support of their CTRM system  
  • Quickly resolve all technical issues
  • Test solutions to ensure functionality has not regressed

Value Creed Services Mobilized:

Run Smart™ 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.

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CTRM Upgrades & Enhancements

Customer-first service to bring your upgrades online quickly and seamlessly, with minimal disruption of your workflow. Dedication that outperforms vendors.

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CTRM Upgrade Success

Value Creed brought in the expertise to extend the company’s IT resources and complete the CTRM upgrade executing across three key phases:

CTRM Upgrade Success

Value Creed brought in the expertise to extend the company’s IT resources and complete the CTRM upgrade executing across three key phases:

Phase 1
Development to remediate broken functionality

Overnight monitoring of all your vital CTRM services, with error handling and resolutions ready by the time your in-house team starts their day.

Phase 2
QA testing
across functional areas

On-demand services during your team’s working hours, from user support, custom workflows, technical upgrades, and more.

Phase 3
Going live and optimizing the functionality

Bring your CTRM onto the cloud for 24/7 server monitoring and daily database backup, unlocking new insights at scale.

Value Creed’s CTRM Testing Services and Expertise On Demand Solutions

Through Value Creed’s development, QA process, and testing efforts, technical issues were quickly resolved, achieving:

Full regression test
run-through to catch issues
before reaching the
business user.

Remediation of 150 class
events in the newly upgraded
CTRM platform with deep testing
to ensure the go-live target
was achieved.

Successful delivery
of the CTRM upgrades within
three months, with
fully functional. 

Learn More With These Resources

Achieve Your Goals at Every Stage of the
CTRM Journey​
Value Creed’s Expertise on Demand solution bridges the gap between bottom-line needs and the decades of experience available from an outsourced team. See how Value Creed’s teams of technical and functional experts enable your organization to achieve your goals at every stage of the CTRM journey in five unique ways.
Learn More>
The New Approach to CTRM Upgrade and
Extension Testing
Value Creed’s Expertise on Demand solution bridges the gap between bottom-line needs and the decades of experience available from an outsourced team. See how Value Creed’s teams of technical and functional experts enable your organization to achieve your goals at every stage of the CTRM journey in five unique ways.
Learn More>
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