Because of the recent technological advancement, most organizations are accepting Energy Trading Risk Management Systems to rationalize tasks, lessen operation costs, and manage risk.
FREMONT, CA: In the current market, Energy Trading Risk Management is hard and demands a secure, stable, seamless, end-to-end integration of different processes for commodity trading activities from the inception point of the trade to post-settlement.
ETRM employs software and technology to integrate trading processes between the front, middle and back offices, usually in real-time, as part of the overall enterprise resource planning strategy. ETRM strategy also real-time managing commodity trading positions and exposures with market-to-market analysis, P&L reporting, and regulatory monitoring.
Why is an ETRM System Vital? Operational Risks
ETRM Software is considered a sub-category of the broader CTRM software category. ETRM software supports business processes along with trading energy commodities. Financial institutions and investment banks engross commodity trading through various systems such as manual, automated, and often hybrid trading systems.
The operational risks resulting from systematic failures, back-office and settlement errors, and manual trade-entry errors lead to an increasing number of failed trades. A strong ETRM strategy involving an STP system mitigates these risks, mitigates costs, and increases efficiencies.
It will give Real-Time Access to the Markets.
Financial companies can employ technological innovations to streamline the trading process with Straight Through Processing (STP) support. By allowing the uploading of trade blotters right to the system, parsing the data, and assigning it to applicable fields, STP eradicates manual entry of trade details.
Many human errors are caused associated with inputting erroneous trade data, so this process will reduce those errors. In the market, gaining access to real-time positions and data has become crucial, so ETRM systems give near real-time access to MTM values concurrent with ICE and other exchanges. If all the functions are automated through electronic processing, it will prevent costly errors due to human mistakes and delays in manual processes.
