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CTRM Professionals – LinkedIn Group
For more on CTRM, see this Group on LinkedIn: CTRM Professionals
That link takes you to a different site, i.e., to LinkedIn.
Post – September 26, 2020
LinkedIn has a size limit, which this exceeded, which is why we put the full content of the post here:
Good News: The CTRM Professionals Group Description Has Been Enhanced For Your Benefit
It is now more applicable for the times and more helpful for our members.
This is notable in part because of how rarely we update our Group’s description. This is only the second time in our history that we have done so.
The first time was to change the name from ‘ETRM’ to ‘CTRM’. This was done in response to the fact that the majority of the industry had adopted the ‘CTRM’ term over the original ‘ETRM’ term. This made sense, as there was always an intended inclusion of energy, metals and softs.
Now, as we did then, we are following and adapting to an industry trend.
For this most recent update, we added wording to recognize the increasing preference of firms to deploy an overall end-to-end technology solution consisting of multiple parts, vendor-supplied or home-grown, seamlessly integrated. This is a trend away from the all-in-one type approach as typically promoted by Big CTRM.
There are three major reasons for the rise in popularity of the Integrated CTRM approach:
1) Technology Has Advanced
If everything is in the cloud anyway, firms ask, what difference does it make if the Trading part is not the same system as the Risk part, so long as they appear to act as one system? Another example is the rise of competing ‘Risk as a Service’ offerings, which enable firms to focus on just the ‘Trading’ part of a solution and ‘outsource’ the Risk part.
2) The Return of Vendor Risk as a Decision Consideration
Firms are rightfully worried about putting all of their system eggs in one basket. A generation ago, Vendor Risk played a large role in system selection. Back then, the concern was that CTRM vendors were too small and might go bust. In today’s world, the concern is more often the opposite. They worry that Big CTRM is too large, which might put them at a negotiating disadvantage and could result in them getting a lower level of support and less features added to the product over time.
3) More Open Standards
These firms typically have a custom built feed from the exchange to their CTRM solution, or one provided by a vendor.
It is very often the case that the Buyer and the Seller of what by definition is the exact same trade each into a different CTRM system. E.g. the Buyer has ‘CTRM System A’ and the Seller has ‘System B’.
This is one of the most commoditized (pun intended) parts of an overall end-to-end Trading solution. E.g., it is low value-add functionality. This is not the sort of thing what will give one firm a big competitive advantage over another.
So why should firms struggle so much with this?
A better solution would be to have one very highly functional system that just ‘sucks’ the trades down from the exchange and has a common Trade Model to support any Trade handled by ICE, CME, etc. Then once the trade is ‘on premises’, it can be copied, ‘pushed’ into whatever solution the particular firm has for Trading and Risk, which is a much, much easier technology problem to solve.
Firms might chip in for an industry consortium or cooperative for a highly secure, super easy to use, very robust tool, that has a limited scope of just getting trades from Exchanges to get them ‘on premises’, and has universally applicable functionality like field level mapping capability.
The lowest-value parts of an all-in-one, old-style, legacy solution from a Big CTRM vendor are the parts that are the most ‘commoditized’, i.e., where the vast majority of firms do things in the exact same way and, what is happening here, is that over time, these parts are getting pulled out into less costly and more functional solutions.
September 2020 and Forward LinkedIn Group Description
We provide information and resources for CTRM Professionals who help firms select, implement, maintain and get the most value out of IT solutions for wholesale commodity trading and risk management for all commodities including Energy, Metals and Softs.
We use the term CTRM (Commodity Trading and Risk Management) to be inclusive of both legacy all-in-one systems that attempt to provide a comprehensive solution in the form of a single piece of software as well as the modern version of an end-to-end CTRM solution, seamlessly integrated from multiple vendor-supplied and/or homegrown components.
In some contexts, we may distinguish these two paradigms by using the following terms:
‘CTRM’: Refers to a single-software approach
‘CT/RM’: The slash is meant to indicate that the ‘Trading’ part of the overall solution is a different software or tech than the ‘Risk’ part of the overall solution. The term also indicates that they function together as if they were one combined system.
Pre-September-2020 LinkedIn Group Description (Now Obsolete)
CTRM (Commodity Trading and Risk Management) professionals such as consultants focused on vendor selection, implementations, & upgrade projects, people who deploy and support CTRM software at firms involved with wholesale commodity trading, and employees of CTRM software providers.
Introduction to CTRM
Click on this link for a great introduction to CTRM software: Introduction to CTRM Software