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Survey: Energy Traders Using More Information

Survey: Energy Traders Using More Information

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

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

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

Deregulation of energy markets, particularly in gas and electricity, is having an impact on trading - but this has so far been less dramatic and more gradual than is often stated. Around half of the Saladin survey group has little visibility or understanding of the differences between the various sectors, but about 45% see some effect on their own recruitment and resources, and around 30% note changes in their approach to trading, the commodities being traded and trading room performance.

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

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

Joe Fisher, Houston

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ISSN © 2577-9877 | ISSN © 1532-1266
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