Two Major Trends in Commodities’ Software

Two current trends in CTRM/CM worthy of note are (1) an increasing interest and need in more advanced risk analytics than would usually be found integral to a CTRM solution and (2) the trend towards Commodity Management (CM). More Advanced Risk Most CTRM’s have historically been light on advanced risk analytics rather providing position reporting, MtM, and PnL along with some limits and alerts at various levels. Of course, some did provide more advanced analytics and risk capabilities but if we are honest, they were few and far between. Over time, more functionality has been added in terms of risk analytics and reports in most CTRMs but very few are truly what we would think of as an advanced risk analytics platform. Two areas where this becomes readily apparent outside of the lack of functionality like stress testing, more sophisticated modeling tools, different types of VaR, more sophisticated calculations around cash flow, credit, and valuations, would be in areas like performance and scalability, and in the ability to cover the entire portfolio of commodities, FX, IR, and other instruments to provide an enterprise view. The issues are that often, the CTRM is used only for a particular commodity or commodities.… continue reading

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