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Detailed Glossary
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TRADING |
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Auto Trade Capture | ||
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Auto Trade Capture is a capability in most trading organizations (and many have an application called ATC) that allows trades executed on an electronic trading platform (usually exchange or broker) to be automatically downloaded to our organization's ETRM Detail ATC usually works by accessing an Instance of Trayport GlobalVision which is a proprietary product. Trayport provide broker trading platforms to most common Energy Trading Brokers and some Exchanges, and also acts as an interface to many Exchanges running their own trading platforms Trades executed on compatible platforms may be accessed as XML and mapped into the local ETRM It is normal for trades to be entered into the ETRM in a status that requires a trader to "validate" or "approve" the trade as having been executed Trades may also be received from other platforms, often in the form of FIX format messages Most ATC systems consist of:
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Baseload | ||
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Term used in power (electricity) trading and operations to describe continuous delivery (24 hours a day, 365 days a year) Detail Baseload is the most basic type of power profile Baseload may refer to generation - nuclear power plants provide excellent baseload generation - but cannot easily be switched on or off so are no use for other profiles Baseload may refer to trading - a contract for delivery in 2024 may usually traded as Baseload, Peak or Offpeak Peak and offpeak are related profiles that (as their names suggest) deliver during the set of hours that are defined as peak (e.g. 07:00 - 19:00) or offpeak (e.g. 19:00 - 07:00 the next day) in general Baseload = Peak + Offpeak which is to say if we sell the same volume Peak and Offpeak for the same period then we have effectively sold Baseload If we buy Baseload and sell Offpeak, then we have effectively bought Peak | ||
Bid | ||
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A Bid is a type of Order; a trader bids to buy a product or commodity at the Bid price Detail The trader bids to buy a product at a particular price Bids are normally submitted to a Broker or an Exchange If a bid is matched by a subsequent offer by another party, then a trade is executed If the bid matches an already quoted offer then a match is made and a trade is executed See also Offer
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Blotter | ||
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A Blotter is a traditional term for a form on which trade details are recorded by a trader as trades are executed Detail Original blotters were pre-printed forms with a row for each trade, in which the trader wrote by hand the trade details in defined columns Traders often use a spreadsheet to capture trade details as a form of electronic blotter Trade details from blotters are either subsequently re-keyed into a trade record system (ETRM), or may be electronically uploaded into an ETRM Many ETRMs have trade blotters built into them to allow trades to be recorded directly as they are executed Deal ticket is a similar term for a pre-printed form on which trade details are recorded. Typically a blotter allows one trade per line to be recorded, whereas a deal ticket - designed for more complex trades - usually has one trade per page
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Broker | ||
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A broker acts as an intermediary in the trading process
Most energy execution brokers operate a trading platform, that allow Orders to be submitted on a variety of standardized trading Products or Instruments.
When Orders are matched then a trade is executed, and the parties making the matched Bid and Offer are each notified that a trade has been executed.
Detail
There are three types of brokers commonly involved in energy trading:
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Capacity | ||
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Capacity is a type of commodity associated with gas and power, and gives a trading organization the option to "move" gas and power through the respective networks (pipelines and grids) Detail Capacity may be bought in short or long-term auctions directly from the Transmission System Operators (TSOs), or may be traded bilaterally Ownership of capacity entitles the owner to transport gas or power from one part of a network (location) to another A trading organization does not need to buy capacity to buy and sell a commodity at a location, it does if it wants to transport the commodity to a different location For example capacity on the Interconnector France-Angleterre (IFA) entitles the owner to transport power from the UK grid to the French grid or vice versa As capacity may be used to change the location of a commodity, it is somewhat similar to an option on a (physically settled) location spread and is usually valued as such
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Carbon | ||
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Gas, oil and coal all contain carbon - when they burn the carbon is oxidized to carbon dioxide. Carbon dioxide, as we all know, enters the atmosphere, and is generally believed to cause global warming There are various schemes to reduce the emission of carbon dioxide, called emissions schemes, and these require major emitters of carbon dioxide to provide certificates matching their emission of carbon dioxide. These certificates may be acquired in a number of ways, and there is a market for organizations with surplus certificates to sell, and organizations who need more certificates, to buy Detail Naturally wherever a market exists to trade anything, speculators attempt to profit by buying and selling - in this case - carbon (in the form of certificates) | ||
Cascading | ||
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The process of decomposing longer tenor Exchange traded derivatives (futures and swaps) contracts for the equivalent shorter contracts Detail Let's start with an example - a trader buys a futures contract for delivery for the whole of 2018, a so-called Cal-18 contract Every day that contract is available to trade, and the Exchange publishes a settlement price for that contract that determines daily margining At the time of trading (2014) the Exchange does not offer any other contracts covering 2018 - months or quarters for example At the end of 2017 the trader wants to keep the position open, but the Exchange can't continue to publish a Settlement price for the 2018 yearly contract because it can't be traded (the delivery period has already started) By this time the Exchange is offering Quarters contracts covering the whole of 2018, and Month contracts covering at least the first three months of 2018 So the Exchange, the Clearing broker and the trader all cascade the year contract into four quarterly contracts; Q1, Q2, Q3, Q4 2018. Q2, Q3 and Q4 are all still tradable, but the Q1 position needs to be closed out, or itself cascaded into three months, January, February and March As you've probably realized the January contract will very soon be untradable, so it needs to be
By cascading longer contracts into shorter contracts shortly before the longer contracts begin delivery the Exchange can effectively offer a small set of monthly, quarterly and yearly contracts, that have monthly granularity in the short term, but cover a period of years into the future As an example EEX are quoting the following Phelix Futures contracts at the time of writing (11 November 2014):
(If you're wondering why November 2014 is still being quoted then that's because it is financially settled through the delivery month - the contract is not tradable in November) | ||
Clean Spark Spread | ||
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Clearing Broker | ||
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An organization that acts as an intermediary wishing to trade on an Exchange Detail A Clearing Broker acts for an organization in two capacities: Intermediary between a trading organization and the Exchange's Clearing House - trades are executed directly with the Exchange itself Intermediary between a trading organization and an Exchange to allow trading with that Exchange without being a member | ||