The CTRM Blog

The U.S. power industry is all too familiar with trendy policies and ideas, oftentimes thrust upon it by outsiders with an agenda. However, there are trends that energy companies and their vendors would do well to follow closely over the course of the next year. One such trend in the United States is the regulation of Greenhouse Gases (GHGs). Climate change and energy are now intertwined as demonstrated by the following major legislation proposed in Congress in 2009:

• The American Clean Energy and Security Act of 2009 (passed by the House Representatives and stalled in the Senate) and
• The Clean Energy Jobs and American Power Act of 2009 (proposed and stalled in the Senate)

Last week, I had an opportunity to talk to Mr. Manav Garg, the CEO and Founder of Eka Software Solutions, about his company’s background, aims and objectives. Eka first appeared on CommodityPoint’s radar screen around a year ago as a vendor of non-energy Commodity Trading and Risk Management software highly ranked for its coverage of agricultural commodities. But Eka has made rapid progress and it has already established a presence in the metals space and now has a foothold in certain energy commodities too.

The following article is published with permission from the authors. I post it here because it may be of interest to readers of the blog. You will recall that Amaranth, a large hedge fund, crashed a couple of years ago as a result of its natural gas positions causing some ramifications in markets. Brian Hunter, the “can do nothing wrong”, trader involved in this issue was held responsible for the problems and this article is about how the FERC have now found him to be in violation of Anti-Manipulation rules.

On January 22, 2010, a Federal Energy Regulatory Commission (FERC) administrative law judge ruled that Brian Hunter, a former natural gas trader at Amaranth Advisors LLC, violated the Commission’s Anti-Manipulation Rule. This case marks the first time that FERC has found market manipulation by a futures trader. Judge Carmen Cintron found that “Hunter intentionally manipulated the settlement price of the at-issue natural gas futures contracts. His trading was specifically designed to lower the NYMEX price in order to benefit his swap positions on other exchanges.” This initial decision is now subject to review by the full Commission.

UtiliPoint International and Forbes Custom Solutions Group have co-produced a series covering key issues in energy and related industries, including the impact of recent economic conditions, regulatory changes, technology, clean energy and the environment.

The Great Transformers series engages senior executives, public policymakers, industry influencers and thought leaders on the forefront of today’s dynamic energy market. Topics explored include Smart Grid, converging technologies, climate change and energy efficiency.

A special section on The Great Transformers will appear in the March 15, 2010 issue of Forbes magazine.

To view The Great Transformers Interview Series, please click here.

The CTRM product landscape has always been somewhat fractionated, with a large number of product vendors servicing component process of the commodity trading value chain, or in some cases, specific processes associated with a single commodity. Others, those generally regarded as the “Big 5″, have gained their market leading positions by providing multi-commodity solutions that, while not addressing all the business processes associated with all commodities, do address a large portion of the functionality required by the largest energy and commodity trading operations around the world. Traditionally, most have focused more on the financial trading side providing straight through processing for paper trades while offering some degree of functionality for the physical trading but perhaps lacking operations and logistical management for physical trading.