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CTRM Professionals – LinkedIn
Group
Overview
For more on
CTRM, see this Group on LinkedIn: CTRM Professionals
That link takes
you to a different site, i.e., to LinkedIn.
Recent Post
See this recent
post from the CTRM Professionals Group with an important announcement.
Good News: The CTRM
Professionals Group Description Has Been Enhanced For Your Benefit
It is now more applicable
for the times and more helpful for our members.
This is notable in part
because of how rarely we update our Group’s description. This is only the
second time in our history that we have done so.
The first time was to
change the name from ‘ETRM’ to ‘CTRM’. This was done in response to the fact
that the majority of the industry had adopted the ‘CTRM’ term over the original
‘ETRM’ term. This made sense, as there was always an intended inclusion of
energy, metals and softs.
Now, as we did then, we
are following and adapting to an industry trend.
For this most recent
update, we added wording to recognize the increasing preference of firms to
deploy an overall end-to-end technology solution consisting of multiple parts, vendor-supplied
or home-grown, seamlessly integrated. This is a trend away from the all-in-one
type approach as typically promoted by Big CTRM.
There are three major
reasons for the rise in popularity of the Integrated CTRM approach:
1) Technology Has Advanced
If everything is in the
cloud anyway, firms ask, what difference does it make if the Trading part is
not the same system as the Risk part, so long as they appear to act as one
system? Another example is the rise of competing
‘Risk as a Service’ offerings, which enable firms to focus on just the
‘Trading’ part of a solution and ‘outsource’ the Risk part.
2) The Return of Vendor Risk as a Decision
Consideration
Firms are rightfully
worried about putting all of their system eggs in one basket. A generation ago,
Vendor Risk played a large role in system selection. Back then, the concern was
that CTRM vendors were too small and might go bust. In today’s world, the
concern is more often the opposite. They worry that Big CTRM is too large,
which might put them at a negotiating disadvantage and could result in them
getting a lower level of support and less features added to the product over
time.
3) More Open Standards
As an example, many firms
do a majority of their trades on an exchange, e.g., ICE or CME. That includes both exchange-traded items and
OTC (Over-the-Counter) cleared items.
These firms typically have
a custom built feed from the exchange to their CTRM solution, or one provided
by a vendor.
It is very often the case
that the Buyer and the Seller of what by definition is the exact same trade
each into a different CTRM system. E.g.
the Buyer has ‘CTRM System A’ and the Seller has ‘System B’.
This is one of the most
commoditized (pun intended) parts of an overall end-to-end Trading
solution. E.g., it is low value-add
functionality. This is not the sort of
thing what will give one firm a big competitive advantage over another.
So why should firms
struggle so much with this?
A better solution would be
to have one very highly functional system that just ‘sucks’ the trades down
from the exchange and has a common Trade Model to support any Trade handled by ICE, CME,
etc. Then once the trade is ‘on
premises’, it can be copied, ‘pushed’ into whatever solution the particular
firm has for Trading and Risk, which is a much, much easier technology problem
to solve.
Firms might chip in for an
industry consortium or cooperative for a highly secure, super easy to use, very
robust tool, that has a limited scope of just getting trades from Exchanges to
get them ‘on premises’, and has universally applicable functionality like field
level mapping capability.
The lowest-value parts of
an all-in-one, old-style, legacy solution from a Big CTRM vendor are the parts
that are the most ‘commoditized’, i.e., where the vast majority of firms do
things in the exact same way and, what is happening here, is that over time,
these parts are getting pulled out into less costly and more functional
solutions.
September 2020
and Forward LinkedIn Group Description
We provide information and
resources for CTRM Professionals who help firms select, implement, maintain and
get the most value out of IT solutions for wholesale commodity trading and risk
management for all commodities including Energy, Metals and Softs.
We use the term CTRM
(Commodity Trading and Risk Management) to be inclusive of both legacy
all-in-one systems that attempt to provide a comprehensive solution in the form
of a single piece of software as well as the modern version of an end-to-end
CTRM solution, seamlessly integrated from multiple vendor-supplied and/or
homegrown components.
In some contexts, we may
distinguish these two paradigms by using the following terms:
‘CTRM’: Refers to a
single-software approach
‘CT/RM’: The slash is
meant to indicate that the ‘Trading’ part of the overall solution is a different
software or tech than the ‘Risk’ part of the overall solution. The term also
indicates that they function together as if they were one combined system.
For historical
purposes, here is the legacy LinkedIn Group Description, which is now obsolete.
CTRM (Commodity Trading and Risk Management) professionals such as consultants focused on vendor selection, implementations, & upgrade projects, people who deploy and support CTRM software at firms involved with wholesale commodity trading, and employees of CTRM software providers.
Introduction to
CTRM
Click on this
link for a great introduction to CTRM software: Introduction to CTRM Software