January | 2017
Contrary to the financial services industry which has been quick to adapt to new age technologies such as hybrid cloud solutions, machine learning and artificial intelligence, the energy/commodity trading industry is largely in its nascent stages. However, the speed of adoption of such technologies is increasing rapidly. Capital markets across the globe are witnessing increased trading volumes, complex derivative structures, cross border transactions and stringent regulations. This has profoundly increased the complexity in monitoring transactions across different jurisdictions.
We have consolidated the various factors into three different ‘waves’ which will have a profound effect on speeding the development of Automated Trade Surveillance, Compliance and Risk Reporting Solutions for players in the energy/commodity trading industry.
Wave 1 - Increased Regulatory Demands Globally
Wave 2 - Low Margins / High Cost Pressures
Wave 3 - Complex Trading Strategies
Conclusion
The nature of such transactions is becoming increasingly common. It is estimated the rogue trading cases have costed their organizations more than $16 billion. And these are only the known cases. It is anybody’s guess how many of such trades dodge an organizations financial risk controls.
History has shown us that abusive trading strategies not only causes huge losses to a firm, but more importantly damages its brand and reputation to a point of no return.
Luckily, several ETRM systems already collect the required data to conduct effective trade surveillance. The key is visualizing this data in a meaningful manner and knowing exactly what to look for and detect any outliers.
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© 2021 Wipro Limited |
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