If your business is associated with the Turkish Electricity Trading Business and pondering on when is the ideal time to build or purchase an ETRM or Energy Trading and Risk Management solution, you have landed on the right page. The gist of the article is to delineate some key factors when it comes to selecting the ideal time to build or purchase an ETRM solution.
ETRM is referred to the business process related to managing the energy trades and/or portfolios of the physical assets ranging from energy trade or position, deal capture and confirmation to the credit as well as risk management, deal scheduling, settling, and invoicing. ETRM entails the complete end to end process of management of physical and financial trade or life cycle of an energy position.
Here are some key factors to consider:
- Market liquidity
High liquidity refers to the quick buying or selling of electricity with little or zero loss at any time. It also signifies that there are many counter-parties involved which would take speculative positions, shielding the assets through the market and/or altering the positions in a high frequency. If you are willing to be an active participant in the liquid market, you will be having many frequent transactions with other market players. Hence, eventually you will need a reliable ETRM solution in order to monitor your activities.
- Instrument types
The standard derivative tools usually referred to as plain vanilla are the most used risk management tool. They are popular because they are standardized and easy to grasp. The complex non-derivative tools are often referred to as exotic have the ability to offer powerful tool for managing the relevant price risks. Today, all instruments traded in the OTC via the broker screens and Exchange are base load. It is quite straightforward to manage. Each instrument has its own feature and they come with a price.
- Number of traders and locations
It is quite easy to manage few traders at one spot. Seeking mid and back office adjacent to the front office is also an advantage to implement a full deal life cycle, ranging from deal capturing to invoicing. This establishment will bring down the operational risks as well as the communication problems. As the distances increase between the trades or offices, the things tend to become trickier. You will require an ETRM solution, which tends to compensate the drawbacks and bringing a seamless data flow, integration as well as security.