The primary factor contributing to energy trading room successis information, which comes before risk management and workplacecultural factors, according to a Saladin survey of energy traders.

Traders told Saladin they are using more information andanalysis than they did a year ago. Saladin predicted a year agothat Internet usage would outpace traders’ predictions, which theinformation provider found to be the case with its latest survey.Also as predicted, there is an increased focus on risk managementand integrated systems. Three-quarters of traders reportedincreased use of the Internet. More than 20% of trading roomsimplemented new risk management systems over the last year, andnearly a third of those surveyed noted advances in sophistication;in implementation of value at risk; and in systems, controls andprocedures.

According to survey results, the greatest impact on energymarkets overall comes from an increase in cross-commodity trading.Traders predicted further growth and opportunities over the nexttwo years, as well as continued development of mixed andderivatives trading. Also predicted are increased competition,market instability, and restructuring.

Deregulation of energy markets, particularly in gas andelectricity, is having an impact on trading – but this has so farbeen less dramatic and more gradual than is often stated. Aroundhalf of the Saladin survey group has little visibility orunderstanding of the differences between the various sectors, butabout 45% see some effect on their own recruitment and resources,and around 30% note changes in their approach to trading, thecommodities being traded and trading room performance.

Of 37 companies cited by survey respondents, Enron, Vitol, andMorgan Stanley had the top three trading rooms, followed by J Aronand BP and Koch, which tied for fifth place.

The Saladin Report is available from Saladin and on the SaladinWeb site at www.saladin.com.

Joe Fisher, Houston

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