Beat the system

The complexity of the energy markets has given rise to a host of risks that traditional trading systems often do not address. Paul McLean-Thorne gives his views on a well-designed energy trading and risk management system

In June, a simple cut-and-paste clerical error caused Canadian power company TransAlta to submit winning bids for routes on the New York independent system operator (ISO) that it did not intend to win. The error went undetected by any value-at-risk (Var) calculations or stop limits until the New York ISO announced the company had won – by which time it was too late to reverse the bids. The error cost the company $24 million.

Operational risks in trading environments are well known. However, the

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