OTC trading platform of the year: BNP Paribas’ Cortex CD

Energy Risk Awards 2021: Enhanced Cortex CD offering enables much-needed access to volatile markets

Ronan Julien, BNP Paribas

Liquidity and transparency was in high demand last year as commodities firms grappled to manage their risk exposures in the face of extreme volatility. For many firms, accessing derivatives markets via their own systems was difficult at the start of the pandemic when remote working kicked in suddenly. 

Step forward BNP Paribas’ Cortex Commodity Derivatives (CD), a web-based single dealer platform for over-the-counter commodity hedging, which became key for an increasing number of firms last year. It offers direct market access to a wide range of energy, metals and agricultural products with front-to-back instant trade processing and compliance functionality.

As well as the increased liquidity on the platform last year, clients also benefited from an array of new features, such as tailor-made hedging solutions, greater connectivity and the introduction of environmental, social and governance (ESG) products with carbon emissions.

“We had a lot of feedback from clients in the first two months of the pandemic that we were one of the main access points to the market,” says Ronan Julien, commodity derivatives digital chief operating officer at the bank. “Cortex is completely external and this was a real benefit to companies that didn’t have access to their own systems. Through Cortex they were connected to the market, they knew what the prices were, and were able to trade. It was key for a lot of firms.”

This is reflected in Cortex CD volumes. Since its launch in December 2017, Cortex CD has experienced steady growth but during the initial stages of the pandemic, transaction numbers tripled as corporates adjusted their hedging positions, says Guillaume Picot, global head of corporate and investor commodity derivatives sales. 

“This type of overnight adjustment would not realistically be possible without firms having direct access to a robust platform,” he says. “Over half of our flow trades were executed by our clients themselves.”

ESG products and carbon emissions were added to the platform in the first quarter of 2021. According to BNP Paribas, this makes Cortex CD the first bank-operated OTC trading platform to offer these instruments. It takes the full suite of products on the platform to 326 oil-related products, 16 agricultural products and six carbon emission contracts.   

BNP Paribas has been active in the carbon market for 15 years, conducting both trading and structuring activities, so adding carbon products to the platform was a natural evolution, says Picot. The bank’s activity in carbon markets is closely aligned with its wider sustainability and ESG strategies, with the energy transition sitting at the heart of all these activities.   

“Different clients have different levels of focus in terms of dealing with emissions, but it’s an issue that affects all of them now, not just those in Europe,” says Julien. “So being able to reach a platform that offers transparency around live prices and forward curves, is very helpful.”

There have been other recent enhancements to the platform. Forward curve graphs and price export functionality have improved price discovery and the introduction of an order management system enables firms to manage multiples orders. This was particularly important during the chaos of last year. The order management system allows clients to place an order in the system and receive price alerts and trade at predetermined market conditions or for a given fixing.

Another important feature for Cortex CD users that was developed in the third quarter of 2020 is BNPP Connect, an encrypted instant messaging service that enables clients to connect instantly with salespeople, directly through Cortex CD. It also provides access to a number of automated tools that provide real time, customisable news and content. For example, clients can access BNP Paribas’ research and trading desk commentaries, or automated bots such as BNP’s US Department of Energy bot, which analyses weekly US oil statistics in real time.

“BNPP Connect was the most important addition to the platform last year apart from emissions trading,” says Heni Zouiouich, head of commodity e-sales at the bank. “We give this to clients for free and it’s something they really appreciate.”