The volatility of the energy market makes people think that the market is very risky and also they think that there are very little investment potentials! Unfortunately, the truth has something else to define and means that the volatility is actually an investor’s friend and offers huge profit opportunities with high risks! Proper speculation in the volatile situations and proper risk management will help to earn enormous profits. This can be done by the study of long term trends (ups and downs) and locking upward big trends will generate the expected profits. Yet another aspect being the seasonal trends when certain energy resources are in high demand and it is then when, the supply is stockpiled to meet the inflated demands. Usually the prices increase in anticipation of an increase in demand.

If you are looking at the intra-day price movements, it is worth noticing that energy market passes through intra-day price volatilities. As a trader it will be difficult to analyze the long-term trends and speculate the immediate future in the short time. The reason is the multi-variate dependency of the price fluctuation. This explains the need of trading systems which are capable of providing an ‘analysis of’ and ‘insight into’ the market. They generally run on two principles: ‘Improved Business Intelligence’ and ‘Advanced Analytics’.

Energy Trading Risk Management Software by Hyper Rig can be used by the utility and energy trading companies. These companies operate in the zone of high risk and peculiar complexities which are inherent to the energy market. What they require is a simple to use solution that can handle the backyard complex dynamics. The Energy Trading Risk Management Software has the following supporting features:

·         Trading in natural gas, crude oil and products, power and coal.

·         Supports forwards, swaps, swaptions, cap-floor, structure product trade types.

The Functional and technical features of Energy Trading Risk Management Software are:

·         Front Office: Fast trade capture and extensive market exposure on the excel sheet of trader. Enables risk monitoring and real time trading.

·         Middle Office: Risk and position calculation with flexible reporting module and 100% failover capability.

·         Back Office: Monitoring of daily activities and creation of business work flow processes.

·         User Management: Centralized user management and user details management with single windows authentication.

The architecture of the Energy Trading Risk Management Software and its scalability along with efficiency is making its base stronger and stronger. With the advances in Information Technology, the software is all set to become the ultimate and ultra precise speculating and risk management software… Let us foretell the future!

The initial motive of banks was just a routine financial service but with the passage of time they have changed gears and take a new role which entails stringent risk management. This drift came due to the interest rate (and interest rate derivatives) risk in the implicit form which rose out of the loan-deposit mismatch in the balance sheet of the banks. It was not long when they realized that a change in approach is required and that a proper risk management approach towards market based interest rate derivatives.

Evolution of banking risk management

During Multinationalization (the period during the first three quarters of the twentieth century) risk management by banks involved the liquidity risk and the credit risk. However, during the last quarter (the evolution of Globalization) the focus turned on the foreign exchange and the interest rate risk. This happed due to the deregulations and privatization and the integration of the national and local markets since mid 1970’s.

Modern trends in global banking and need of innovative and effective financial risk management system

The modern trend in global banking is the battle of establishing supremacy in the ever increasing competitive market. The various methods used by the different banks include consolidation of their own resources with the other banks to gain a global presence; the banks try to be entrepreneurial, client centric, alert and global in thinking. This resulted in something more and directly implied growth in size by consolidation of resources and Diversification of Risk. This is the mark up point for the need of effective financial risk management system!

Owing to these drastic changes in the banks, the Bank Risk Management Software by Hyper Rig has given them the leverage of efficient, fast and reliable risk management tool! The Hyper Rig Bank Risk Management Software gives the following support to the banks:

Supports financial futures, options, forwards, swaptions, cap-floor, swaps, interest rates and FX trade types.

Supports spots and Forex swaps, interest rate derivatives and structured products, vanilla and exotic options.

The benefits of the Bank Risk Management Software are bullet-piled below:

Front Office: Fast trade capture and extensive market exposure on the excel sheet of trader. Enables risk monitoring and real time trading.

Middle Office: Risk and position calculation with flexible reporting module and 100% failover capability.

Back Office: Monitoring of daily activities and creation of business work flow processes.

User Management: Centralized user management and user details management with single windows authentication.

Risk Management: Performs Historical VaR, Monte Carlo VaR, What if scenarios, back testing, Parametric VaR, Incremental VaR, Curve transformation and shifts and Scenario based VaR.

Hyper Rig’s Bank Risk Management Software provides that leading edge which the Banks look for. We strive to provide the best-in-class business solution…

Comprehensive overview of the commodity market:

A market where the raw or the primary commodities are traded on the basis of commodities exchanges which are regulated. Standardized contracts are used for their buying and selling. The global commodity market includes physical goods (food, metals etc) and not the services. Commodity trading consists of direct trading of the physical goods and also the derivatives trading.

The prices in the commodity market have a unique way of determination and are done on the basis of the motives of the buyers and sellers. Simple economic logic applies where the increase in demand from the buyers pulls up the prices and in case they are scared, the sellers will push the prices down. The algebra seems quite simple however; there are other deciding factors like the economic, political, social and cultural factors which have a deep significance. The commodity market can be cash or futures market. In cash market there is again spot and forward market. The spot and the forward markets are jointly known as the ‘actual’ market. The futures market is a special type of forward contracts market. Futures market reduces risk and increase the flexibility.

Benefits and Risks of Commodity trading: There are some associated benefits as well as risks in commodity trading. Few of them are discussed below.

Benefits:

• Returns of the commodity market are not associated with price fluctuations in the debt or equity market.
• Capital gains from the commodity trading gives augmented tax benefits.

Risks:

• Highly volatile and unpredictable because of the weather, inflation, Forex rates, national monetary policies, and a lot more.
• Based on speculations.

Hyper Rig’s Commodity Trading Software gives the following support to the commodity trading firms:

• Supports varied asset classes Natural Gas and Power, Crude Oil and products, Coal, emissions, metals (precious and non precious) and Softs.
• Supports forwards, swaps, swaptions, cap-floor, structure product trade types.
• Addition of new commodities and trade types.

The benefits of the Commodity Trading Software are:

• Front Office: Fast trade capture and extensive market exposure on the excel sheet of trader. Enables risk monitoring and real time trading.
• Middle Office: Risk and position calculation with flexible reporting module and 100% failover capability.
• Back Office: Monitoring of daily activities and creation of business work flow processes.
• User Management: Centralized user management and user details management with single windows authentication.

Commodity trading software solution from Hyper Rig not only handles multiple commodities but also it is customizable to meet commodity specific needs. In spite of these features, the software remains efficient and simple!

Hedge Funds use various markets and multiple commodities as their playground. There are many challenges faced by the industry owing to its recent entry in the financial market as a mainstream investment vehicle.

Challenges Faced by Hedge Funds Industry:

• Increase in competition due to recent significant growth in terms of asset building. Managing growth and asset management have become the major challenge faced by the industry.
• Operating in multiple markets and commodities with a limited resource is yet another major challenge that the investment vehicle faces.
• Industry is in the need of the efficient, fast, intuitive, functionally rich solution that can be implemented in the shortest possible time and with the minimum IT overhead.

Current issues & challenges of Hedge Fund risk management:

The industry as a whole is facing some current issues. Some of them are mentioned below

• Low budgets lead to a restriction in the ability to support or accept the disproportional fixed costs to implement, supply and maintain their risk systems.

Risks in Hedge Management:

There are certain challenges that the industry face in terms of risks in the Hedge Management. They can be listed down as:

• Not being very well regulated, the Hedge Funds have some structural risks which are undisclosed.

Hedge Fund industry requirements keep changing because of many reasons like increase in speculative trading, changes in the regulations and emergence of new trading strategies. This gives birth to various requirements like risk assessments, study of trends, swap and others. The situation becomes more and more challenging. This calls for dynamic Hedge Fund Risk Management Software requirements which can give efficient, fast, reliable and scalable solutions with minimum up-front cost and grater intuitions.

The Hedge Fund Risk Management Software from Hyper Rig caters to all the needs of the industry with the following features:

• Supports all kinds of funds.
• Captures the risk of highly hedged strategies.
• Supports all asset classes and types including non-linear ones.
• Supports commodity and financial futures, options, forwards, swaps, cap-floor, swaptions and structured products trade types.
• Supports addition of new trade types and commodities.
• Front office component to give a complete picture of the market exposure and fast trade capture.
• Middle office provides risk and position calculation with flexible reporting module and 100% failover.
• Back office monitors daily activities and creates business work flow processes.
• Performs Historical VaR, Monte Carlo VaR, What if scenarios, back testing, Parametric VaR, Incremental VaR, Curve transformation and shifts and Scenario based VaR.
• Centralized user management and user details management with single windows authentication.

In short the Hyper Rig’s Hedge Fund Risk Management Software is a complete solution for the Hedge fund risk managers.

Hello & welcome to the HyperRig blog. It is a pleasure to have you join the HyperRig community. This blog is the address of an informational library, providing details about the everything relevant to energy and commodity trading & thus risk management software. Thus, if you are an energy trader or a commodity trader or a risk manager, this blog is for you.

HyperRig is a global provider of trading risk management software, and data management software technologies. Established with the focused approach of eliminating the most crucial of challenges faced by the trading firms and thus supplying with concrete answer in this direction, HyperRig is synonym for innovation. Software architects, developers and veterans of the energy risk management software, commodity trading software and financial trading and risk management fields, comprise the HyperRig team, constantly functioning to meet the stated vision. The idea is to help create solutions. With this blog, HyperRig takes another step forward in this direction and thus proffers to most sophisticated notions in the domain of risk management software solutions.

The latest industry events, news in circulation, product information and reviews, analysis, expert opinions and simple chit – chat, all would be here at the HyperRig blog. A platform for expression, the blog promises to present an insight to the most complicated nuances of the risk management software industry.

A tool to exchange information, the HyperRig blog is an endeavour to bring together the risk management software community. You can know and express at HyperRig, with HyperRig and others who share a common wavelength with you. Your questions would be answered here and comments valued.

We hope that posts apprise you with the essential, challenge you and thus in every way disentangle the risk management software mystery.

Hedge funds are risky, but that is why they offer better returns. They are neither transparent, nor liquid and are even secretive, but that is essentially why hedge funds are linked with black box investing. We know it all, yet are confused with the dynamics of hedge funds risk management.

Gone are the days, when investors invested in hedge funds and simply waited. Present is the era governed by hedge fund risk management software programs, making every possible attempt to understand the risks inhibited in hedge funds and thus trying to supersede negative gloom. Both market risks and operational risks are covered by the hedge fund risk management software. However, while every other software program proposes to manage the same, how to select the best one??

The most suitable hedge fund risk management software should address all issues with respect to the management of portfolio during the design and implementation stages. It should abide by the 3Ms i.e. measure, manage and monitor risk. The software must be designed such that it provides for the dynamic hedge fund strategies, and thus the vigorous and erratic risk scenario. The unusual risk patterns must be managed for and risk transparency should be the key focus.

The Hyper Rig hedge fund risk management software does essentially the stated. Dynamic risk intelligence works as the base to manage the task. Risk measurement methodical schema is worked out, which can be customized as per the deployed hedge fund strategy. With the stated variant of hedge fund risk management software managing the task, the return part of hedge fund investment, for sure outweighs the dreary risk component. Alternatively, the path from ‘let’s wait’ to ‘I know the results’, is easily navigated with hedge fund risk management software.

Commodity trading can add depth to the portfolio, assist with asset allocation, dodge price escalation apprehensions, facilitate better returns and more, but …

If there is so much positive to the subject, why is there still scope for the ‘but’ factor?? The ‘however’ component can be understood by scrutinizing the other side of commodity trading; the face which relates with risk. Commodity trading has happened since ages, when none even imagined that the simple exchange system they are following, would transform to a sophisticated trading format in commodities and derivatives. The transformation however did happened and for good. From a sustenance exchange deal, commodity trading today is an important earning tool with commodity trading software programs assisting through the deal. But the change didn’t just happened on the procedures; it also inculcated the undesired risk element.

Commodity trading is a function of risk. Done in form of futures, the trading depends largely upon expectations, predictions and thus the uncertain calculations. Moreover, the available information is not controlled, as it is in other comparable schemas. Thus while commodity trading has positive news for many, there are ifs and buts associated with the framework, which again are equally robust.

The scenario is such that the loss, like profit, could be voluminous. Not only the calculated margins, but the existent account balances could be eroded in the deal. Future traders, thus ought to be well aware of the possible risks and risk aversion strategies. A number of steps can be taken in this direction, but the domain is huge and thus there are no guarantees that the steps will finally be effective; unless, there is an answer as comprehensive as the question itself.

Risk management by way of commodity trading software, fabricated on the likes of Hyper Rig risk administration strategy is the answer.

The insurance business is going through a radical period of change. With mergers and acquisitions creating super entities both in the insurance and re-insurance sectors. Coupled together with the concept of securitisation of insurance risk, few other industries are facing the same scale of IT related issues. In many traditional insurance circles the notion of insurance risk management software means little more than using a spreadsheet to keep a current list of active contracts. It is still a common site around Lloyds of London to see brokers walking around with large bundles of paper work under their arm.

Things, however, are about to change and an industry that has always relied heavily on manual processes and paper work is about to enter the information age. At the heart of this radical change is the notion of securitization of insurance risk. Securitization is a process that other financial services verticals have already been through. If we take bank credit for example, in the past five to ten years the emergence of credit derivatives within the capital markets has meant that banks have successfully securitized the credit risk inherent in traditional loan portfolios. In the forth coming decade we will see the same thing occuring in the insurace industry where re-insurers in particular will off load insurance risk as packaged securities. This process has already began with so called “cat bonds” and other insurance linked derivatives.  

The implications for the insurance industry as a whole are not yet fully realised by many. Insurance risk managemement software is in its infancy. Talk to ten insurers and they will each give you a different definition of insurance risk management. But in a world where mortality rates used to rule the day insurers will now be faced with insurance premiums that are as much linked to captial market forces as they are to the underlying insured risk. As capital markets become more and more integrated, the boundaries between fundamental pricing of risk and pure market sentiment is becoming blurred. And so insurers, like it or not, will be forced to change the way they do things. In the same way that investment banks now need operational systems that are integrated end-to-end with market and credit risk management software, so will insurers. The potential for catastrophic operational losses greatly increases once the dynamic of market forces and market sentiment enter the equation. Everything from contract management to simulation of risk scenarios will need to be integrated so that insurance firms get an enterprise view of their risk. 

One solution is to invest in a risk management framework. That is, risk management software that allows you to integrate data and systems together across the entire firm. The important thing here is that the risk management software brings a high degree of flexibility. It must seamlessly integrate data and systems together from different regions, subsidiaries and departments and allow for an integrated view but not a prescriptive one. One thing is for certain, the changes about to befall the insurance industry will be unpredictable and the risk management software must reflect this by being highly flexible too.

Commodities trading is becoming more risky. Talk to commodities traders and they will tell you the fundamental price relationships are no longer reliable. Even spreads between between commodities which used to be reliable are now showing new and unpredictable behaviours. Never before has trading risk management software been more important and yet the process of selecting trading risk management software can seem bewildering. Superficially risk management software vendors will tick all the boxes but the experience of many traders is – be careful! Not all risk management software vendors were born equal. Not all risk management software will meet your needs.

If you are thinking about selecting trading risk management software here are some things to be aware of.  

First of all the analytics. Does the risk management software allow you to integrate your choice of analytics – e.g. your own in-house library functions or an industry standard like Numerix™.  

Secondly does the software itself allow you to control the quality of data. The old adage garbage-in,-garbage-out applies equally well to trading risk management software. The system must provide tools that gather data form different trade capture systems, filter input data, run consitency checks, range checks, reorganise and regroup data to fit your analysis. These things are essential. 

Thirdly, does the risk management software vendor have the means to support you well. Do they have implementation teams with the right skills available. When you call for support how quickly will they respond. Will you need to spend ten times as much implementing the trading risk management system as the initial price or does the system provide inbuilt tools to make implementation quick and simple.

The fourth thing to consider is system fragility. Trading risk mangement systems by their nature require connections across your organisation to many different systems and databases – e.g. prices, trading from different desks, credit information, master data etc. This can lead to a fragile enterprise process. Any one link in the chain can be the cause of delay. The trading risk management system should provide a robust enterprise bus for communication between source systems and the trading risk management software itself. 

The fifth issue to consider is protecting the future. Will the trading risk management system provide the performance you need. What about next year? Will it grind to a halt clogging up your network at peak times, providing answers too late to be useful. Check that your trading risk management vendor can run their system on a high performance dirstibuted grid or better still make sure the system has inbuilt grid-enabled capability this will provide linear scalability as well as high performance and fail-over capability.

Commodities trading has become popular in recent times. This once obsure sector of trading now attracts financial trading banks and hedge funds whereas once upon a time only those with deep knowledge of physical commodities markets would dare to enter. 

The new entrants into the market are there for one reason only. They can see an opportunity to make great returns but their presence in the markets bring changes for the more traditional commodity trader. The key to understanding the new market dynamic is that sophisticated traders understand commodity risk management. With superior knowledge, trading techniques and the right trading and risk management software, they are equally able to make profits in a falling or rising market. 

At first it might seem a little shocking to realise that household names in investment banking are now moving cargos and consignments around the world. This is not some virtual reality game but real physical oil and real gas pipelines. There was a time when bankers would shy away from the idea an oil tanker being delivered to some guys in Wall Steet. It seems almost ludicrous but the world of commodities trading is changing and this is now the new reality. 

There are however, some deep rumblings of disquiet in some circles. Whilst traders can make great profits in commodities trading, risk managers and senior executives would be wise to take note. The risks associated with physical commodities adds a new level of complexity. Banking software for trading and risk management is not designed to cope. And so the banks have gone out and purchased energy trading and risk management software specifically for the job. 

The problems start to become apparent when you consider the complexity of trying to integrate say, an energy trading and risk management software with the banks existing financial risk management software. The designs do not work well together and can easily create mismatches. Trying to tie together systems that were never designed to talk to each other can create a tangled web that is fragile and fragmented. 

In the race to get to market early the tempation is always there to cut a few corners. Rather than spend time designing and architecting robustness into the overall eneterprise solution, the pressure is on to deliver a working solution quickly but this can lead to flaws in the design, which is where the danger lies. Hidden deep within the cyber world lies the possibility of hidden errors with the potential to accumulate over time and create substantial losses. The operational risk embedded within energy trading systems landscapes can be the silent killer. 

How can such risks be avoided? Firstly, trading firms need to recognise that spending money and effort to create robust reliable enterprise systems is money well spent if it avoids the potential of catastrophic operational losses. But it is not just a question of money. With the right technology it is possible to deliver working solutions quickly without compromising on good architecure and best practice. Fully functional light-weight framworks for risk management are available from Hyper Rig for example, that ensure firms can reduce time to market and still have reliable, integrated trading and risk management software across all asset classes.