Commodities trading platform of the year, Asia: Bloomberg

Energy Risk Asia Awards 2020: Integration with Bloomberg terminal key to success of commodities electronic trading platform

Emilie Gallagher

This year has been challenging for trading platform operators who have faced extreme price volatility – including negative oil prices – and the new remote working arrangements of their clients.

But Bloomberg’s Commodities Electronic Trading (CMET) service has thrived under these conditions, receiving high praise from users and winning Commodities trading platform of the year in the 2020 Energy Risk Asia awards. During the past year, Bloomberg has added some of the largest firms in the energy and metals space to their footprint of users, while supporting clients through an array of regulatory and Covid-19-related challenges.

“The past 12 months have been challenging for the commodities market, which has seen unprecedented market volatility, the collapse of demand and lower trade flows,” says Emilie Gallagher, Bloomberg’s global head of commodities and FX product. “Despite these challenges, our clients were able to trade from home smoothly and uninterrupted, even when crude oil prices were negative.”

One of the main differentiators of Bloomberg’s commodities trading platform – and something that users say they appreciate – is the fact that anyone with a Bloomberg terminal can activate their full workflow and connect with all their accounts, as well as access pricing, fundamental data, research and business intelligence.

The pricing information comes from a wide variety of sources including exchanges, commodity brokers, price-reporting agencies and other market-based organisations. Information is available from all sectors including: oil, natural gas, power, base and precious metals, agriculture, shipping, coal, carbon and renewables.

Bloomberg users have the ability to search fundamental and statistical commodity data points on inventories, stock levels and supply and demand. Terminal subscribers also praise access to Bloomberg News’ coverage of breaking, market-moving news and the ability to customise news alerts and filters, which help pinpoint opportunities.

Bloomberg’s CMET service replaces time-consuming manual processes and enables corporations to easily request, receive and record real-time prices from preferred counterparties. Through a request-for-quote process, clients can execute and confirm trades and seamlessly integrate details into order management, risk management and back-office systems. Having all these capabilities together allow commodities professionals to easily and quickly use one system for all their needs.

All of these led to notable wins in the Asia-Pacific region in 2020, including Indonesian oil and gas firm Pertamina, which is using CMET to execute and analyse its new hedge programme. Additionally, one of Europe’s largest automobile producers and its counterparty banks in China are using the Bloomberg solution for its new metals hedging programme in Asia.

For Pertamina, one of the biggest attractions of using CMET for tendering and executing its hedge programme was the audit trail provided, says Sani Saifuddin, head of crude trading at Pertamina. “It’s really useful for us to have everything recorded and to hand when the auditor needs to see it,” he says.

The platform also proved itself to be robust in the face of unprecedented price volatility and negative oil prices. As West Texas Intermediate crude futures dropped to minus $40 a barrel on April 20, many traders scrambled to look for pricing models that could account for negative prices.

Gallagher said that being part of Bloomberg was very helpful at that time. “Bloomberg has a whole team devoted to options pricing, so we had the ability to price negative oil quickly,” she recalls.  

Another huge challenge posed by Covid-19 was the sudden transition to remote working. Bloomberg worked with users to access their Bloomberg Terminals from home. Bloomberg’s secure instant messaging connectivity between dealers and clients also proved very useful at this time, Gallagher says.

The firm continues to develop and expand the product. “We will continue to innovate our product offering by adding new features to help global clients with market transparency and trading efficiencies,” says Gallagher.