Energy Risk Europe: Firms weigh up data management systems for regulation

Sapient Global Markets, Vitol and Gazprom Marketing & Trading discuss how firms can prepare data management systems for regulatory requirements

Developments such as the Regulation on Energy Market Integrity and Transparency and the European Market Infrastructure Regulation have made the question of how to prepare data management systems a burning issue for energy firms. In a series of interviews filmed at Energy Risk Europe in October, technology vendors and energy trading firms discussed how the issue should be approached.

"The regulations are becoming clear and the sort of questions energy firms are asking is: 'What should I do going forward?' There’s a number of things they can be doing – one of them is looking for accelerators and toolkits in the marketplace that will enable them to meet their reporting requirements without too much invasive surgery on their existing systems," advised Mitchell Cox, director at Boston-based technology vendor Sapient Global Markets. There were a number of technologies in the market firms could use to satisfy the requirements that would link up with their existing systems, he added.

One particularly tricky issue addressed at Energy Risk Europe was whether firms should build their own systems or go for commercial off-the-shelf alternatives. Andrew George, global head of risk at Geneva-based trader Vitol, said the issue had to be decided on a case-by-case basis: "It depends on what kind of company you are. If you are a relatively small company, or commodities are a relatively small part of your operations, then an entirely off-the-shelf energy trading risk management (ETRM) system might be appropriate," he said. "We personally have an in-house generated system that fits well with our requirement to see the risk within the global portfolio, but there are many viable ETRM systems on offer in the market that work quite well."

Rob Pringle, director of global IT at Gazprom Marketing & Trading, the trading arm of Russian energy giant Gazprom, agreed: "There is no textbook you can reach out to that gives you the answer as to what is the best route. It all depends on the context of your organisation," he said.

Cost was also an issue, he added – and here, firms had to ensure they made the right comparisons when weighing up the benefits of in-house or off-the-shelf systems. "You’ve got to make sure that you compare apples with apples. If you have a business problem you’re trying to solve and you can match that with a commercial solution with the minimum of customisation, that’s going to be a good fit. As soon as you try to customise that solution, your total cost of ownership is going to rise," he said.

Regulatory reform was one issue that dominated the agenda of Energy Risk Europe this year - others included low trading volumes and the poor economic environment. Click here to read the highlights.