Building for what’s next: An Interview on the forces reshaping the energy market

How does Beacon help us better manage risk during times of greater market volatility?

From our experience working with these markets there are two essential ways that Beacon by CWAN boosts risk management for power and gas trading: live risk monitoring and cloud-native scalability.

First, live, real-time risk monitoring for all types of power and gas instruments delivers early warning of unexpected market movements and rapid identification of key factors. Our transparent and customizable models enable you to manage complex instruments the way you choose and trade with broad visibility of possible scenarios.

Second, Beacon by CWAN’s cloud-native platform provides you with full control of near limitless elastic compute resources, allowing you to scale processing power up and down as needed. In times of greater uncertainty and volatility, faster calculations and analytics get you in front of the market, with a clearer understanding of where the opportunities lie.

What are some ways that CWAN can help us increase our power and gas market performance?

We recently asked some executives, traders, quants, and analysts at energy & commodity traders what they thought about advanced technologies, their perceptions of risk, and the critical focus areas for competitive advantage. When we compared the lowest-performing firms against the highest-performing ones, we identified three foundational capabilities that underperforming firms should focus on to catch up to their peers:

1. Asset complexity – The global energy transition is being driven by complex power and gas instruments. Beacon by CWAN includes the ability to quickly and clearly define, modify, and extend power contracts, structured energy products, and other tradable instruments, supporting sophisticated portfolio strategies without leaving money on the table.
2. Scalability – Markets are continuing to accelerate. CWAN’s platform is backed by a cloud-native core that expands and contracts on demand, delivering results when and where they are needed, providing rapid drill-down into underlying inputs, and then releasing excess compute for effective cost management.
3. Data integration – Pricing models and risk analytics need accurate and timely data to deliver on their promises. CWAN’s investment data management automates ingestion, validation, and reconciliation with pre-built adapters, third-party connectors, and flexible reporting.

We are concerned that our visibility into market risks is deteriorating in the face of higher volatility and more complex products. How does CWAN help with that?

Another thing we found out in recent Energy & Commodity Research Report is that energy trading executives, managers, and analysts who reported worsening risk visibility over the past two years pointed to two common characteristics of legacy systems as the leading causes:

1. An inability to modify or customize pricing models and risk analytics, caused by opaque and inflexible vendor black boxes.
2. Difficulty adapting to rapidly changing market conditions, with insufficient processing power to handle the speed and volumes of modern energy trading.

Do we really get access to the source code?

Yes, you do. Our platform license includes complete source code transparency that let you see, and customize, pricing models, instrument definitions, and risk analytics. The underlying core platform is hosted by CWAN, but customers can see that code as well. With no black boxes, you can follow the trail of calculations back to the exact code and data, eliminating uncertainty and boosting confidence in complex calculations and the sophisticated strategies they enable.

How can I get these benefits without replacing my legacy systems?

From the beginning, Beacon was designed as a platform that plays well with others. With our front-to-back energy trading system, you can deploy out of the box with one trading desk or asset class and grow from there. Or you can tap into the platform’s scalable processing for faster and more complex calculations that feed back into your legacy systems. Or build a real-time risk monitoring dashboard that pulls data from existing ETRMs and augments it with additional data and calculations for a comprehensive view across asset classes, trading books, and investment portfolios.