.jpg)
One of the opening presentations at Commodity Trading Week Americas 2022 in Houston is titled, “Impact of Extreme Volatility on Large Trading Companies.” In many ways, this presentation is indicative of the question at the heart of today’s commodities trading sector: in this era of global instability, how can trading companies reduce risk and optimize their margin strategy to ensure continuous growth? Cassini Systems, the leading provider of pre-and post-trade margin analytics for derivatives market participants, will no doubt be at the forefront of this conversation. Their team, as well as the other 500+ industry leaders attending the Houston event on June 8th and 9th, will be grappling with the industry’s biggest concerns and identifying potential solutions to these pressing issues.
This surge in instability has massively strained the balance sheets of commodity traders, with billions of dollars in margin calls across the industry triggered daily by huge price moves. In this current time of volatility, Cassini Systems’ proven margin analytics platform gives traders the tools they need for margin strategy optimization and the reduction of initial margin, which in turn can save companies millions of dollars. Over the past few years, global events such as the pandemic, the war in Ukraine, and ongoing supply chain issues have seriously impacted the stability of the commodities trading market. This current period is being seen as a “return to normalcy” but there is a possible concern that if there are multiple Black Swan events, at what point do Black Swans become the new normal?
The numbers speak for themselves. In one instance, a Commodity Trading Advisor which managed funds across a diverse set of trading strategies, including the energy markets, was able to reduce their initial margin by 47%, from about $140m to $74m, as well as raised unencumbered cash levels by $66m through the integration of Cassini’s Margin Analytics Platform into their trading workflow.
Liam Huxley, CEO, and founder of Cassini said: The concern around market volatility isn’t going away any time soon, and now more than ever we are seeing firms place importance on reducing IM and improving returns as a means of bolstering their margins and preventing losses. Each sector, from agriculture to oil and gas, has a unique set of concerns that must be addressed right now. Events such as Commodity Trading Week Americas 2022 provide people in these industries a place to trade ideas, learn from one another, and address industry-wide anxieties.
Targeted digital solutions such as Cassini’s Margin Analytics Platform will only become more important as the ramifications of today’s instability are felt over the course of the next few years. The industry leaders attending Commodity Trading Week Americas 2022 will have an important role in driving this recovery process and shaping the future of the commodities trading market.
