Commodity Position and Risk Management

ENERGY AND COMMODITIES

COMMODITY POSITION AND RISK MANAGEMENT

Commodity Position and Risk Management

Effective Commodity Risk and Compliance Management

In the current market environment, companies are looking to have a complete view into your positions, market and reference data, pricing and valuation models as well as sophisticated reports allowing long-term forecasting for assessing the overall budget needed for the supply campaign and estimating the expected profit for the period.

Know Your Position

Commodity risk management starts with “knowing your position.” Energy and commodities traders must understand longs and shorts, both physical and financial, while managing positions (including exchange and CFTC position limits) on demand and often in real time.

FIS solution can help you manage and control commodity positions and exposure as well as measure, manage, report and ultimately control your risk and compliance requirements. Our solution allows you to:

● Manage physical and financial positions

● Plan and report on hedge strategies

● Monitor exchange and CFTC position limits

● Examine margin and net liquidation values

● Analyze risk and exposures

Effective management of commodity risk is critical in a time of changing volatility, complex instruments and increased regulatory scrutiny. The cost of inadequate risk controls can be catastrophic for any energy market participant, both financial and reputational. However, multiple, far-reaching regulations to monitor and manage data as well as generate reporting is taxing staff, systems and processes.

FIS Kiodex is a software-as-a-service (SaaS) solution, with add-on market and reference data capabilities to value commodity portfolios and exposures. The solution components can be used standalone or together, depending on the client needs. The solution includes the following components:

●● Risk workbench

●● Control

●● Real-time

●● Global market data

Clients around the world use Kiodex to manage risk and control costs for competitive advantage.

Commodity Position and Risk Management

Risk Workbench

FIS Kiodex Risk Workbench component helps capture physical and financial commodity positions as well as financial FX and interest rate transactions. Our solution utilizes global market data, proprietary valuation models and risk reports to valuate transactions and manage risk. With modules for management reporting, documentation, hedge accounting and risk reporting, our solution provides:

● Streamlined, efficient capture of multiple trade types covering the commodity, interest rate, FX and equity markets

● Connectivity to futures commission merchants (FCMs), administrators, ERPs, and swap data repositories (SDRs)

● Position, exposures, P&L, market sensitivities and risk reports

● Seamless, end-to-end trade lifecycle management, including back-office and hedge accounting

● Comprehensive risk analytics including Scenario Analysis VaR, CFaR, PFE, and CVA

Control

Our real-time Control component allows market participants to monitor their portfolios and receive alerts on any potential or actual breaches of internal and external limits. It supports automated, user-defined notifications to maintain compliance with:

● Exchange position limits

● CFTC or other regulatory position limits

● Internal controls on positions, volumes, term, MTM, P&L, Greeks, VaR, ratios, net liquidating value, and margin

Real-time

As trading volumes increase, monitoring positions and exposures in real-time becomes more important than ever. Traders and risk managers must know their aggregated exposures by product throughout the day, and the impact on their portfolio P&L stemming from rapid price swings during periods of market volatility.

Our Real-time component provides real-time visibility into traded positions, such as s long-dated contracts, options and cleared swaps as well as near real-time visibility into futures, options and cleared OTC derivatives captures and aggregates. The solution also supports powerful “what if” queries that allow future scenarios testing using real-time data. This capability enables you to see your P&L updated throughout the day, providing an early warning on potential losses so you can optimize margin and pre-trade risk.

Global Market Data

Accurate, independently-produced market data is essential for effective risk management. FIS Kiodex Global Market Data provides global commodity end-of-day market data, including forward curves, volatility surfaces and correlation term structures from several markets including: softs/agricultural, crude oil, refined petroleum products, natural gas, power, base and precious metals, freight/maritime, coal, weather, petrochemical, and emissions. Our solution provides:

● Monthly, granular forward curves, ensuring accurate valuations and risk estimations – even in markets with sparse exchange-traded volumes

● Forward curves derived from multiple OTC and exchange sources, resulting in longer dated tenors than published by the exchanges

● Volatilities across all contract months and deltas, ensuring options of all maturities and strikes can be valued

● Valuations produced from an independent source, enabling counterparty prices to be validated and auditors to be satisfied with the valuation process

Risk revealed. Risk understood. All in real time.

FIS Solutions for Energy and Commodities

FIS solutions for energy and commodities help utilities and retailers, pipeline and storage operators, marketers and traders as well as integrated energy companies compete efficiently in global markets by streamlining and integrating the trading, risk management and operations of physical commodities and their associated financial instruments. Through real-time data, connectivity and analysis, FIS solutions help you achieve transparency and regulatory compliance, optimize end-to-end transaction and operational lifecycles and meet time-to-market needs with flexible deployment options. As your technology partner, we can help take advantage of the latest innovation and explore new opportunities.

About FIS

FIS is a global leader in financial services technology, with a focus on retail and institutional banking, payments, asset and wealth management, risk and compliance, consulting and outsourcing solutions. Through the depth and breadth of our solutions portfolio, global capabilities and domain expertise, FIS serves more than 20,000 clients in over 130 countries. Headquartered in Jacksonville, Florida, FIS employs more than 55,000 people worldwide and holds leadership positions in payment processing, financial software and banking solutions. Providing software, services and outsourcing of the technology that empowers the financial world, FIS is a Fortune 500 company and is a member of Standard & Poor’s 500® Index. For more information about FIS, visit www.fisglobal.com

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