Commodity prices have increased dramatically over recent years. Commodities are now considered like any other security and are a useful means of spreading risks with an interesting yield.
The most commonly negotiated instruments are futures contracts on raw materials. However operators also use funds based on raw material indexes, Exchange Traded Funds (ETFs).
The Commodities division
Nexeo has created a division of experts to provide services for commodities management.
Our experts work on functional or technical points of financial companies' commodities IT systems.
Functional aspects :
Valuation of listed and OTC contracts, simple and structured contracts on the following markets: oil, natural gas (US and EU), electricity (EU), base metals (LME, COMEX), precious metals (LBMA), shipping freight and carbon emission. Futures, forwards and swaps.
Compliance of OTC contracts with counterparties and market standards (ISDA)
Combining positions by underlying instrument, by index : conversion of units, forecasts and margin calculation
Market risks: sensitivity to underlying prices, interest rate risk, FX deltas, stress testing, value-at-risk
Credit risk, listed markets and clearing houses: netting, margins (SPAN)
Management of transactions from start to finish: pricing, trading, controls, confirmations/matching, market operations, fixing, financial and physical settlements
Reductions in operational risks: STP
Multi commodity index contracts (GSCI)
Impacts on Basel ratios.
IT aspects :
Market information searches, description and imports (REUTERS, BLOOMBERG, etc.)
Creation of price curves, volatility by index and/or group of indexes curves
Set up of correlations and covariances
Design of trading screens
Development of automatic trading and/or hedging systems: design, addition of functions and installation
Synchronisation with listed markets (and clearing houses): automatic imports of transactions, monitoring of events and market operations
STP: creation and optimization of workflows
Development of the IT system's theoretical and physical data model: reverse engineering and development, changeover of private systems (legacy systems) to market systems
Design, production and maintenance for operational teams, regulators and supervisors
Commodities expertise
In our team we have senior consultants with large experience on the trading floors of major European brokers / public utilities / banks. We also have experienced business analysts and computer programmers who have had specific training in this activity.
Our team can help you with:
Consulting: business analysis, solution design, benchmarking with solutions available on the market (Sophis, Murex, Openlink, Calypso)
Project management for general projects with functional aspects: adapting systems to new types of assets, overhaul and changes in trading systems
Business analysis and projects:
Collection of needs, functional specifications and design of tests, tests, support and transfer of knowledge
Fixing and management of test environments (databases, referential databases)
Computer programmingand engineering:
Development engineering (.NET / C#, JAVA, C++, VB6)
Software integration and synchronisation with internal processes and external accounts (API)
IT aspects :
