This article is aimed to provide a brief overview of the front office business processes Commodities and Energy Trading Risk Management (C/ETRM) software solutions are designed to encompass. This is the first of a three article series that breaks C/ETRM system functionality into three categories and defines the business processes involved in each of those areas.
C/ETRM Business Processes
The functions seen in C/ETRM solutions are often similar in nature, but they differ in the way they physically manage commodities. C/ETRM systems aim to provide organizational transparency and insight into complex portfolios encompassing all commodity types. Essentially the new operating system of a company, these software solutions also streamline the business processes of the entire organization. With the straight-through processing (STP) of information throughout the front, middle and back offices, these systems ensure efficiency and data accuracy. The specific functions and processes of these C/ETRM systems can be broken down into three categories:
1. Front Office Processes (Series Part One)
2. Middle Office Processes (Series Part Two)
3. Back Office Processes (Series Part Three)
This article aims to elaborate on the first category, Front Office Processes, that are performed Pioneer Solutions’ C/ETRM software solutions.
Front Office Processes
Front office C/ETRM business processes focus mostly on a trade or deal execution that involves:
- Position Reporting/Analysis
- Price Curve Management
- Scheduling and Delivery
- Deal Capture
It is the portfolio analysis and position reporting process that allows organizations to make smart decisions about the deals they decide to execute. In a way, this analysis drives the need for a trade. By analyzing the book of the trade positions and a portfolio’s short and long exposures, this process often necessitates a trade or hedge.
Price Curve Management
Data management companies, like ZE Power Group & LIM provide streaming of pricing data for market price discovery. This import can be programmed to automatically import, ensuring the accuracy of price curves in real time. C/TERM systems also give users the option to create and maintain derived price curves. “What-if” scenario testing supports decision making and the shifting of curves.
Scheduling & Delivery
Another front office process performed by C/ETRM systems is the creation of schedules as well as the complex delivery paths for these schedules. Additionally, this process deals with nominations and scheduling automation (i.e. Pipe EBB Integration) through a third party.
C/ETRM systems, such as Pioneer’s TRMTracker, are designed to capture and track the relative terms and conditions of a trade as well as manage its position throughout its entire lifecycle. Once a trade is fully captured and confirmed, it moves on to the processes performed in the Middle Office.
Check back soon for “Series Part Two: Middle Office Processes” and “Series Part Three: Back Office Processes.”
About Pioneer Solutions
Pioneer Solutions is a global provider of next generation CTRM, ETRM, environmental management and financial and regulatory compliance solutions. Offering the latest in business processing capabilities with a modern data structure, Pioneer’s products offer the user a configurable environment that allows for customizable templates for STP workflow and user-defined custom formula entry. Serving some of the largest utilities and energy companies across the globe, Pioneer’s flexible solutions are designed for rapid deployment and easily adapt to clients’ unique business processes, model complex trading scenarios and automate business processes.