Improve margins and manage your risk exposures

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Phebe Doyle
6 years ago
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1 Improve margins and manage your risk exposures Accurate Insight in Daily Positions, Gross Margins and Risk A Must Have for processors, Traders, Risk managers and Executives

2 Companies exposed to the volatile global commodity markets are facing several challenges. Imbalances in supply and demand, continuous in- and outflow of investor capital, geopolitical issues and adverse weather impacts are common factors which have a severe impact on market prices. Today s price volatility highlights the need for purchasers, traders and risk managers of commodity processors and trading companies to make swift decisions. In order to make these decisions, Commodity Services & Solutions has developed its TRADESPARENT Risk Management Solution. TRADESPARENT increases position transparency and capitalises on your existing accounting, ERP and ctrm systems, while focusing on margin improvement and risk reduction. TRADESPARENT can be quickly implemented without the time consuming implementations you are probably used to. At Commodity Services & Solutions we aim to have clarity in your financial risk positions in months, not years! Meanwhile the burden on your business and IT organisation during the implementation is limited to the absolute minimum. TRADESPARENT RISK MANAGEMENT solution TRADESPARENT supports analysing commodity related risk, margins and performance. It has the capabilities to generate reports on both historical and rolling forward basis. TRADESPARENT dynamically reports a large variety of dimensions like legal entity, country, product group, product, trade portfolio, region and counterparty. This provides management with up-to-date information, helps drastically reduce the commodity market risks and optimise your financial results. TRADESPARENT is a web based, multidata source risk management application, which extracts data from your existing transactional and accounting systems. This extraction process is agnostic to the source of data (generic databases, MS-Excel spreadsheets, legacy systems or Broker Statements). TRADESPARENT combines such multiple source data by means of its unique data mapping functionality. It handles and processes data in a non-disruptive manner, via TRADESPARENT s proprietary data warehouse. TRADESPARENT is available 24/7 on all possible platforms. CSS has developed a comprehensive package of two predefined business models, one for trading and the other for processing companies. 2

3 TRADESPARENT INSIGHT TRADESPARENT Insight provides you complete transparency in your commodity related prices, positions and planning data, independent from physical location, entity or IT platform. TRADESPARENT Insight has the ability to present positions against planning, which provides direct insight in volumes to be procured, sold or hedged. Positions Transparency in positions per period and contract type (physical and derivatives combined), from procurement as well as sales, energy, FX and freight. TRADESPARENT does not only show the gross positions per product but is also able to present the net risk position for both trading as well as processing environments. Price Catalogue The TRADESPARENT Price Catalogue collects and stores all historical, forward and reference prices and provides price analysis capabilities that help to create product spreads, calendar spreads and price indexes. Technology tuned to your main business areas TRADESPARENT Insight Provides transparency in commodity related prices, positions and planning data. TRADESPARENT Performance Reports Mark to Market valuation, open and realised P&L. TRADESPARENT Risk Covers counterparty risk, defines and runs Value-at-Risk and stress test portfolios. TRADESPARENT Server Runs basic processes like importing data, normalising contracts and calculating market prices. Contains the control board, required to configure all TRADESPARENT modules and allocate roles and access according to the desired authorities. BASED ON A COMPREHENSIVE SET OF TOOLS TRADESPARENT PERFORMANCE This module provides an advanced view into the performance of your business. It combines the TRADESPARENT Advanced Price Catalogue with the logic to generate daily Mark-to-Market valuations on a contract by contract basis. Advanced Price Catalogue The Advanced Price Catalogue calculates market prices of all contracts based on liquid reference prices. By using a combination of freight matrices and regional premiums, TRADESPARENT normalises market prices to specific regions from which individual contracts will be valued. This provides the best contract valuation practice available in the market today. Mark-to-Market (MtM) Mark-to-Market valuation is calculated 3

on a contract-by-contract level. With MtM you obtain an accurate understanding of the performance of each contract against actual market prices at the relevant contract position.

4 on a contract-by-contract level. With MtM you obtain an accurate understanding of the performance of each contract against actual market prices at the relevant contract position. The available MtM information can be easily filtered and viewed on a variety of dimensions (entity, subsidiary, product, trade book, etcetera). Mark-to-Budget Compare current performance versus predefined budget numbers. Mark-to-Budget uses your budgeted procurement and sales prices as reference and shows the actual performance against budget. Trade P&L The trade P&L combines Mark-to-Market valuations of open contracts with the realised P&L. This provides an excellent daily insight in P&L development, split up in organisational units, products, product groups, trade books/business units, plants or any other desired dimension. Daily insight in P&L provides the most powerful tool to track your company s performance and manage its results. Drawdown Tracking the decline in a P&L (drawdown) is a key risk management tool, which supports Value at Risk and Stress measurements. The user sets the threshold for alert and strategy re-think. TRADESPARENT calculates the drop from the last cumulative P&L peak and displays the results in graphs and tables. Forward Processing Margins The TRADESPARENT Processing model has the unique feature to present an 18 months forward gross processing margin. This margin is based on all variable cost 4

5 back period, time frame and variable return period can be easily configured to fit the Value at Risk insight you need. Stress Testing With Stress Testing, you create self-defined stress portfolios which can be analysed in a number of ways. These include individual commodity trends and market convergence. and revenues like raw materials, sales and energy. The margin is calculated based on the already booked and planned raw material and energy purchases and product sales, combined with booked contract prices and forward market prices. TRADESPARENT RISK The TRADESPARENT Risk module creates an even deeper awareness on top of the Insight and Performance modules. Risk allows you to define and run Value-at-Risk portfolios, stress test portfolios and develop limit structures on positions, VaR, drawdowns and counterparties. On top of that, you will be able to stress test an unlimited number of portfolios. Value at Risk TRADESPARENT delivers the possibility to calculate Value at Risk values based on 3 different calculation models: Historical simulation, Monte Carlo and Parametric. Value at Risk portfolios can be easily setup for organisations, trade books and product groups. Portfolios, confidence intervals, look Counterparty Risk A full suite of tools is available for screening, classifying and tracking counterparty exposures. Limits are included for volumetric positions, MtM, settlement and forward commitments. Counterparties can be assigned to a personal watchlist. Limit Structures Define limit structures around positions, VaR, drawdown and stress. These limits can be set on a broad variety of dimensions, like product, product group, entity, country or trade book. Thanks to the display of actuals versus limits, you will have timely notification for accurate action to manage risks and results. TRADESPARENT SERVER The TRADESPARENT Server is the heart of the application. It has all capabilities needed to process the imported data, apply logic and configure the application with the TRADESPARENT Control Board. The Control Board allows you to define locations, trade books, products and all other required dimensions. 5

Key Benefits Full interactive access to all relevant margin and risk reports on a daily basis Common and objective views across the company, tuned to user needs and authority Early warning of

6 Key Benefits Full interactive access to all relevant margin and risk reports on a daily basis Common and objective views across the company, tuned to user needs and authority Early warning of potential losses Fast implementation; within months rather than years No capital destruction. Works on existing application infrastructure Proven technology; operational around the globe info@tradesparent.com Netherlands +31 (0)

SWS Back Office-Process Flow

SWS Back Office-Process Flow Contents 1) Flow of the weather trade-notification of each stage 2) Generation of Confirmations and Invoices 3) Payment Reports 4) Settlement Reports 5) Exporting Reports to