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Commodities and ETRM Take control of tomorrow. Whether it’s a case of consolidating an application portfolio with a single integrated platform or deploying the best-of-breed solution for complex derivatives products, we can offer practical and robust design and implementation services. We have delivered Commodities and ETRM solutions to more than ten international derivatives trading desks in recent years. Drawing on our experience, we fully appreciate the importance of a stable, int
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  Commodities and ETRM Take control of tomorrow. Whether it’s a case of consolidating an application portfolio with a single integrated platform or deploying the best-of-breed solution for complex derivatives products, we can offer practical and robust design and implementation services. We have delivered Commodities and ETRM solutions to more than ten international derivatives trading desks in recent years. Drawing on our experience, we fully appreciate the importance of a stable, integrated trading platform for risk management and profitability. We go beyond standard solutions, tackling the most challenging development and integration requirements to meet the evolving needs of a high-margin exotics business. TRUSTED PRACTITIONERS ã  Deep understanding of front-to-back commodities trading and risk management ã  Bespoke solutions that enable new, innovative business strategies ã  Expert quantitative support to develop exotic and structured products ã  Dedicated business support with direct access to specialists ã  Onshore Quality Assurance Centre in London © MRP Partners LLP 2012  MapleRisk   The energy and commodities markets have seen major changes in recent years, transforming the way risk management technology is delivered to market participants. Whatever happens in the market, it is clear that all firms will be forced to deal with increased risk management analytics and reporting capabilities over the coming years. Today’s technology leaders are faced with the dilemma of having to provide more and more complex risk management transformation projects while also rationalising costs. Moreover, the solutions landscape has been complicated by the development of piecemeal hybrid solutions composed of standalone platforms to accommodate firms’ business needs. Over time, firms have become more comfortable with buying vendor-based platforms to manage their listed and vanilla OTC products. However, in order to manage more complex exotic instruments and structured products they have also developed proprietary systems or relied on specialist vendors with expertise in advanced analytics. In the context of a new regulatory framework and increased market awareness, delivering to risk management requirements remains a balance between immediate requirements and long-term goals.  Topics such as better integration, real-time risk reporting and portfolio-wide stress scenarios are high on the immediate delivery agenda, but the solutions are often constrained by ‘as-is’ architecture. While in-house experts are pushed to the limit to maintain mission-critical systems, management may engage consultancies to deliver short-term tactical solutions and also plan for the long term. However, they must bear in mind that some delivery methods are rightly criticised for not serving the industry.  The unfortunate reality is that many commodities and ETRM projects have not delivered on their promises – they have been late, over budget, and short on actual business benefits. In the past, when funds were plentiful, generic consultancies pushed for a rigid, process-driven, waterfall approach that led to massive cost overruns and an end solution that failed to meet business requirements. Commodities and ETRM projects are intensely knowledge- driven and, because of the evolving nature of the business, demand a flexible, iterative approach that is closely linked with day-to-day tasks. OUR APPROACH: Business-driven, agile and iterativeLESSONS LEARNED AND THE WAY FORWARD Our approach gives our clients confidence with incremental, controlled delivery that accommodates the movements of a dynamic trading environment. In contrast with traditional project management approaches that are heavy with documentation and process deliverables, our methodology is devoted to understanding the current functional requirements of the business and defining solutions that anticipate change. For short-term tactical solutions, a full understanding of what is required system-wide may not emerge until development begins and users have the opportunity to interact with the software. For this reason, we work with the vendor and in-house developers to deliver a testable protoype as soon as possible, then work with our clients to refine and extend its functionality. We don’t do ‘big bang’ projects. Instead, through incremental steps, we create carefully tailored, thoroughly understood systems that are completely aligned with our clients’ businesses. For longer-term projects, such as greenfield implementations, our approach is proven to minimise project risk. For most businesses, a wholesale change in the underlying platform can only be delivered over several release cycles. A long-term project is broken down into smaller phases, each playing its part in futureproofing the business. We firmly believe that ETRM and commodities projects must be managed by domain experts. That’s why we use a small, high-impact project team made up of practitioners with long experience in dealing with business requirements – professionals who have seen multiple platform lifecycles and learned from them. In our view, success depends on a ‘triangle of trust’ between the business, the project team and the vendor/developer. TACTICAL SOLUTIONS: Simplified transaction workflow and improved risk reporting Faced with a rising tide of new requirements, today’s organisations are asking themselves one question: ‘What can we do now without a wholesale change to our infrastructure?’ By adding more and more temporary stopgaps, they may find themselves adding complexity to their transaction workflow at the cost of additional auditing, compliance, and reconciliation requirements, misinformed trading decisions, sub-optimal hedges (resulting in reduced profits), potential operational losses and missed opportunities. We believe there is always room to exploit your current architecture. However, it must be done with long-term goals in mind so that the solution improves continually, through incremental change, and is aligned with your longer-term strategy. All too often, the idea of ‘regret spend’ prevents the bold introduction of a completely new architecture, making tactical solutions paramount. We have delivered tactical solutions including: ã  Enhance pre-deal analytics for traders and marketers ã  Enhance post-deal position management ã  Reduce spreadsheet dependency in front-office and middle-office activities ã  Simplify and standardise trading processes to eliminate manual intervention and workarounds ã  Replace manual multiple reconciliation processes with a single automated system check ã  Implement controlled sharing and publishing of trader curves across desks and time zones ã  Create frameworks for exotic and structured products ã  Add the capability to hedge interest rates and foreign-exchange exposure ã  Implement real-time market data feed for intraday full revaluation and stress testing ã  Develop feeds to downstream accounting systems such as SAP, and risk engines such as VAR ã  Develop a central reporting database from standalone systems to facilitate integrated risk reporting ã  Offer pricing and risk management functionalities to external customers BusinessStrategyITFunction Vendor  Functional alignment MapleRisk Execution   SolutionalignmentSupportalignment © MRP Partners LLP 2012  MapleRisk  LONG-TERM VIEW: Adding value at every step of the platform lifecycle Defining solutions around a business strategy Understanding your business strategy. Information technology is an enabler of business strategy. It follows that system selection, configuration and deployment must be business-driven. That’s why our first step is to understand your business model and growth drivers thoroughly. Drawing on our industry experience, we work with you to gain an in-depth understanding of the day-to-day work of your business, identifying what works well and areas for improvement. By looking at the ‘as-is’ process in conjunction with the business strategy, we can define a set of clear, business-driven requirements for system selection. The right platform.  It’s critical to understand broad requirements up front. But businesses do not stand still, so it is just as important to remain flexible in terms of the target operating model. A key criterion in any system selection must be the solution’s ability to evolve, both during implementation and after deployment. We have developed a commodity trading and risk management comprehensive requirements catalogue  that jump-starts the process of defining base system requirements, ensuring that our time is focused on defining your detailed requirements. Gathered from our long experience working at trading desks, the core template includes all the requirements for an advanced trading desk and ensures your system selection benefits from lessons learned and proven best practice across the industry, saving both time and money. Once a platform has been selected, we map the business requirements on to the new platform and re-engineer the business processes to take full advantage of the new functionality. Scalable systems architecture. No matter how strong the functionality of a system, the business will not be able to exploit it without the right underlying architecture. The performance requirements of the end user are crucial in sizing and selecting the right architectural model. To this end, we combine functional requirements and knowledge of your business to develop relevant sizing and performance scenarios to support decisions on architecture. In many cases there are in-house constraints on architecture, but the key concern must be to meet business need – after all, that is what the system is for. Working with in-house IT teams, we help document requirements and assess the current architecture. This helps us to pinpoint areas that need to be addressed and identify the best, most cost-effective solutions. Then we create a road map for achieving the final state that will deliver ‘quick wins’ and minimise risk. But the architecture must also be able to grow, and we provide techniques for monitoring growth to maintain efficiency and high performance – keeping budgets in mind. MAXIMISING RETURN ON PLATFORM INVESTMENT Business Process Re-engineering.  The process of embedding a system in an organisation is not complete the moment a release goes live. In fact, in many ways, it has only just begun. As the system is used, a sense develops of how previously unanticipated business benefits could be realised. By taking an iterative approach, we are able to capture these potential benefits and maximise the functionality of the trading system at every workflow step. This ensures that you get maximum leverage from your investment and also drives a cycle of continuous improvement across the business. Seamless integration. Embedding a system within existing IT infrastructure is a challenge. Poorly implemented integration can undo many of the benefits of the new system. Pinpointing infrastructural ‘touchpoints’ and understanding their impact on workflow is essential. Improved integration not only strengthens the governance of trading operations, but also allows the business to grow, unhindered by unnecessary manual processes such as daily reconciliations. Platform enhancement and stabilisation.  As a business grows over time, it’s natural that system utilisation develops ad hoc, with workarounds becoming part of daily practice. A triangular partnership between system vendor, client and MapleRisk helps us to understand and incorporate these off-system processes within the trading system. Our iterative approach and risk-based quality assurance allow us to introduce new functionality developed by the vendor in a rapid, controlled and progressive manner. RISK-BASED QUALITY ASSURANCE AND SPECIALIST RELEASE MANAGEMENT Risk-based quality assurance. Quality assurance for trading applications is a fine balance between realising benefits through speedy delivery on the one hand, and a rigorous assurance framework that makes quality releases repeatable on the other. Mitigating risks early in the project lifecycle requires incremental additions to the software coupled with continual feedback from the user community. This makes it more likely that higher-severity defects will be detected. In the final stages of development, a structured methodology for ‘go-live’ decisions is crucial. Based on our long experience in software development and managing commodities platforms, we have developed a commodities risk-based quality assurance matrix  that objectively assesses high-risk requirements so you can prioritise testing efforts. Quality Assurance Centre based in London.  Requirements from our QA matrix are mapped to scripts for manual or automatic execution by expert practitioners from our Quality Assurance Centre in London. Assurance in key areas such as analytical functionalities and derivatives pricing requires highly knowledgeable practitioners to interpret variations in data and work with developers to resolve any defects. Specialist release management. Because every step is managed by a specialist, our risk-based quality assurance framework lets you handle frequent releases with minimal disruption and operational risk. Staying at the forefront of technological innovation can give your commodities business a competitive edge. Selectingthe right platformScalablesystemsarchitectureBusiness processre-engineeringand integrationPlatformenhancementand stabilisationRisk basedqualityassuranceSpecialist releasemanagement TANGIBLE BENEFITS THROUGH STRATEGY ALIGNED DELIVERY MODEL   COMMODITIES & ETRM BUSINESS STRATEGY  © MRP Partners LLP 2012  MapleRisk   VALUE PROPOSITION: Our clients, domain expertise, and services Market areas where we have expertise Types of organisation we can help We seek to understand transaction drivers such as… We develop technological solutions to help mitigate risk factors such as… Crude & refined productsNatural gasPower AgriculturalPrecious metalsBase metalsEmissionsBiofuelsCoalFreightPlasticsWeatherForeign exchangeInterest ratesCredit Integrated oil & gasRefiners and marketersMerchant powerBanks, brokers and hedge funds Asset managementSovereign wealthMetal producers and fabricatorsTransportationUtilitiesExchangesMarket operators Downstream end useRisk transferCustomer intermediationProprietaryCapital structuringTreasuryIndexed fund management Asset allocation requirements Accounting, basis, compliance, credit, currency, curve construction, counterparty concentration, embedded optionality, geographical, index specification, interest rates, market, reference data, funding, liquidity, position concentration, physical attribute & logistics, maturity, nonlinear modelling, operational, option exercise, price, regulatory, settlement, volumetric, volatility WHERE CAN WE ADD VALUE? Domain expertise: Pricing and pre-deal analytics, processing and transaction lifecycle, structured products configuration, management information and position reporting best practice, middle-office control functionalities, risk reporting (such as value-at-risk), P&L attribution and scenario analysis, accounting and processing requirements, market parameters. Commodities and ETRM services:  Programme and project management, platform implementation and integration, post-implementation remediation, process design for new activities, business transformation management, business process optimisation and re-engineering, regulatory compliance analysis, risk management, analytics and model validation, quantitative assurance and support, project management of exotic and structured-products initiatives, technical infrastructure analysis and optimisation, reference data management. WHY CHOOSE MapleRisk? When you choose MapleRisk, you’re leveraging proven expertise gained with market leaders. Having observed the evolution of the deregulated energy and commodities markets and participated in multiple platform lifecycles with leading companies, we have the experience to help our clients deliver – even in the most challenging environments. Specialisation is what makes us different from generic consultancies. Our focus allows us to develop a concentrated talent and knowledge base and offer highly specialised local expertise. ã  Deep understanding of front-to-back commodities trading and risk management ã  Bespoke solutions that enable new, innovative business strategies ã  Expert quantitative support to develop exotic and structured products ã  Dedicated business support with direct access to specialists ã  Onshore Quality Assurance Centre in London  ABOUT US MapleRisk is a team of capital markets practitioners with a dedicated commodities and ETRM practice. We work with global hedge funds, asset managers, banking institutions and major integrated energy companies to deliver world-class trading solutions. Our clients choose us because our team comprises sought-after practitioners with a proven track record of delivering complex trading solutions. We are dedicated to helping our clients reach their full potential and thrive in some of the most demanding trading environments of today’s capital markets. We work with our clients to empower and support them in achieving continual and sustainable improvement in their trading infrastructure, and also act as an enabler for innovative business strategies. An evolving marketplace with increasingly complex transactional risk factors demands a specialist approach to platform strategy and delivery partners. © MRP Partners LLP 2012  MapleRisk CONTACT US MapleRisk 14–16 Dowgate HillLondon EC4R 2SUUnited KingdomT: +44(0)20 3137 2872E: info@maplerisk.co.uk www.maplerisk.co.uk  © MRP Partners LLP 2012. MapleRisk is a trading name of MRP Partners LLP. MapleRisk and the MapleRisk logo are registered trademarks of MRP Partners LLP.
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