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.
CALCULATING YOUR PORTFOLIO EXPOSURE
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
The portfolio value is 149,905 GBP. A standard ETRM offers only one conversion i.e. either GBP/EUR(176,887.9 EUR) or GBP/USD(190,379 USD) which doesn’t give out the real portfolio exposures. As a subsidiary, the company has a GBP/EUR exposure but as a global organization, the company has a EUR/USD exposure.
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:
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