Is your commodity trading and risk management system adequate for the “new normal?” New regulations in the US and Europe, extreme price volatility, capital constraints and shorter cycle times demand new risk management strategies.

Triple Point recently hosted a webinar with Accenture’s commodity trading and risk management expert, Alex Chandy, on the latest trading and risk management best practices. Triple Point’s own risk expert, Greg Leck, also discussed how Triple Point’s leading CTRM solution delivers up-to-the-minute risk intelligence to manage portfolio risk exposure, set limits, and control risk.

The webinar highlighted valuable tips on how to deal with today’s market chaos and…

The 2,000 page Dodd-Frank Act is the US government’s response to the financial crisis. While it was signed into law well over a year ago, the finer points are still being negotiated, clarified by lawyers, and challenged by Wall Street players.

For energy and commodity firms operating in Europe, this is a cautionary tale – the European Union (EU) is introducing an alphabet soup of directives and legislation affecting the financial and commodity markets including the Regulation of Energy Market Integrity and Transparency (REMIT), the Market Abuse Directive (MAD), the second Market in Financial Instruments Directive (MiFID II), the European…

If you get the feeling that we’ve been here before, you’re right. I’m talking about the convergence efforts of the two accounting standards organizations – FASB and IASB.  After all, they have been at it for nearly ten years, so the probability of my addressing it at one time or another are quite high. Well, at the end of January the two boards renewed their efforts to find common ground in the development of standards and disclosure requirements. “The boards have been urged to converge their standards on financial instruments. Today’s decision to work together on key differences—which represent the…

Deloitte just released an outstanding report, Tracking the Trends 2012, on the top 10 issues mining companies may face in the coming year. Some of the top challenges include rising capital costs, commodity price chaos, government taxes, and growing labor shortages. Many of these issues have a familiar ring. However, the Deloitte reports warns that: “The factors influencing the global mining industry are moving to a new level of extremity.”

The report is full of practical suggestions to tackle the top challenges, including new strategies to:

Recognizing that it needed a state-of-the-art software solution to effectively manage derivative valuation and hedge reporting for its clients, business consulting services firm Sirius Solutions chose Triple Point’s Commodity XL for Hedge Accounting™. Sirius is the latest in a long line of companies who are realizing that they need sophisticated technology solutions in order to manage the numerous, complex regulations that make hedge accounting a herculean task. The firm will be using Triple Point’s solution to automate the entire hedge accounting process and assist clients with hedge decision making, curve validation, mark to…

Sempra was an amazingly successful commodities trading organization in the 1990s and 2000s before forming a joint venture (being sold) with RBS in 2008.  At one point, Sempra had 44-straight profitable quarters.  I recently read a very interesting article about how newly-formed Freepoint Commodities, which launched its North American operations in March of 2011, is really a “restart” of Sempra.  David Messer, the former CEO of Sempra, is the CEO of Freepoint.  In addition, roughly two-thirds of Freepoint’s employees are former Sempra employees.

I particularly liked this quote by Mr. Messer: “We started trading in June and I think…

The Commodity Management Blog has been closely following the top Commodity Management issues throughout the year. Not surprisingly, posts discussing Dodd-Frank top the list.  Below is a complete list of the 10 most popular posts over the past 12 months based on views and shares.  We thank you for following us and hope these posts have provided valuable tips on how to manage commodities smarter.

With the start of the new year, the US Legislature did not renew the 45-cent-per-gallon tax incentive for producing ethanol-blended gasoline or  the 54-cent-per-gallon tax on foreign ethanol imports.  The incentive cost taxpayers about $6B per year.  This ends thirty some odd years of government support for the biofuels industry.

The real beneficiary could be Brazil’s sugarcane/ethanol industry.  UNICA, the Brazilian sugarcane industry association, issued a press release titled “Time for the world’s top two ethanol producers, the United States and Brazil, to lead a global effort for increased production and free, unobstructed trade for biofuels.”  According to Leticia Phillips…

A December Financial Times article that reported oil price volatility in 2012 could swing between $50 and $150 a barrel might prove quite prescient.  The story, “Fat-tail fears catch oil traders between $50 and $150 bets,” noted that investors are concerned about events that could cause large swings in oil prices.

On the one hand, eurozone debt issues could drive oil prices much lower, but on the other hand, a crisis with Iran (or elsewhere in the Middle East) could send prices much higher.  In the last few days, we’ve seen the saber-rattling between Iran and the US send…

Out of all the changes put forth in IFRS 9 with regard to Hedge Accounting, one that will likely be well received will be the ability to hedge the risk components of non-financial items.  This is big news to many companies out there, in particular the foods industry and airlines.  Under IAS 39 and current FASB rules, they are not allowed to isolate the risk associated with a component of the risk being hedged.  For instance a company that produces baked goods must hedge the overall cost of flour and cannot simply isolate the cost of the wheat component to…