Commodity Derivatives

With the emergence of a host of new commodities sectors – energy, weather, emissions, and freight derivatives – businesses of all types are now being thrust into the commodities markets.

For example: with the advent of new carbon regulations, aimed at reducing greenhouse gases and noxious emissions, corporations that emit CO2 will have to track and manage emissions allowances, or purchase credits to offset their carbon emissions. Energy impacts traders whose primary objective is to manage the obligations and allowances of carbon emissions. New international, carbon and emission credit cap-and-trade markets are being established worldwide, increasing the customer base and trading volumes for the sell-side and investment opportunities for buy-side commodity traders.

During the recent period of economic turmoil, the global commodities markets has demonstrated stability and therefore poised for continued growth as an inflation hedge. The net effect is intensified activity in commodity trading and increased competition.

There is a greater focus on managing risks, particularly volatility. In addition to traditional consumers in the commodities marketplace, new entrants – hedge funds, pension fund managers and alternative investment managers serving the retail sector – are rushing to this market to take advantage of the potential for greater returns.

All these inter-related factors are taxing the ability of legacy systems to price, risk manage, and process commodities and commodity derivatives. Institutional investors are also beginning to evaluate the correlation of commodities against other financial assets, creating demand for structured products such as commodity-linked notes or contracts. The growing sophistication of investors has resulted in demand for cross-asset systems with common analytics for managing increasingly diverse portfolios.

Calypso® Commodity Derivatives is our out-of-the-box, comprehensive cross-asset front-to-back solution to fully support all trade capture, risk management, hedging activity, and lifecycle processing for financial commodities trading.

Calypso’s Commodity Derivatives software solution is fully integrated with the award winning Calypso back office system. Commodities can be processed on the same platform as other derivatives – treasury, or securities products.