A study conducted by SunGard reveals that one out of three energy traders demand advanced analytics, business intelligence and overall more responsive and integrated energy/commodity trading and risk management systems (E/CTRM) in order to adapt and thrive in today’s “perfect storm” in energy and commodities.
This perfect storm, underpinned by uncertainty and price volatility, is the result of a confluence of events – any of which, in a “normal” market, would require time for the markets to absorb and return to equilibrium. These events are:
- weakening energy and commodities demand due to slow global economic growth;
- overinvestment in, and a return of previously constrained production capacity, leading to an extended period of excess supply;
- a strong dollar policy, reducing the value of dollar-denominated commodities; and
- increasing regulatory intervention in commodities markets, impacting broad segments of the commodities value chain.
In this perfect storm, traders require a clear and up-to-the second view of the markets to allow them to act quickly as conditions rapidly change. The SunGard study exposes four key ways energy traders can make their trading operations more competitive and profitable: sophisticated analytics, a single platform/integrated approach, ergonomic trading, and compliance reporting. Key findings include:
- 38% of energy traders and risk managers said their E/CTRM systems do not help adapt to changing market and business challenges
- 41% of energy and commodity traders don’t have a consolidated view repository of trade, pricing and risk data
- 41% of energy and commodity traders say their platforms are not equipped to handle advanced analytics and business intelligence
“The perfect storm poses a clear opportunity for energy traders, but they need to be equipped with the right technology to help them seize the opportunity and unlock its full value. The increasing consumerization of technology provides all industries with the ability to transform the way their human capital works and thus, there is no reason why energy traders cannot benefit from it.” – Lance McAnelly, Partner of SunGard’s energy business