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Detailed Glossary
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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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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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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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Basket | ||
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Balance of Month | ||
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A type of contract in which the delivery period is the remainder of the current month Detail Widely used in gas trading a Balance of Month contract (BoM) can vary from 30 days down to a few days depending on the day traded Balance of Month contracts often have separate contract codes and settlement prices for each day of the month that they are traded | ||
Commodity | ||
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In Energy Trading a commodity is generally either a form of energy itself, or a physical material that may be used to easily provide energy, or a related commodity or service. The most common commodities are oil, gas, electricity (power) and coal Detail Standard energy commodities are: Electricity - almost always referred to as Power in Energy Trading environments Gas - almost always meaning Natural Gas Sourced from underground Natural Gas fields, and increasingly from shale Transported in gaseous form transported through pipelines, or liquid form (LNG) in pressurized vessels and purpose built ships Used in power stations, and directly burned for heating Oil Probably the most heavily traded energy commodity Sourced as Crude Oil from underground oil fields, and increasingly, shale Mostly refined in refineries to produce fuels for heating, transportation and use in power stations Transported mostly by ship (tankers) Coal Sourced from underground coal deposits Transported by ship, barge and truck Biomatter Fuels that are grown, or made from plants Parts of plants may be directly burned in power station Liquid equivalents of gasoline and diesel (biofuels) may be synthesized from plants Related commodities and services include: Freight - for moving solid and liquid commodities Environmental certificates, including carbon Foreign Exchange, FX | ||
Line Loss | ||
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When transmitting Electricity via Interconnector, some of the power is lost and thats called Line Loss. For UK-FR interconnector line loss factor is 1.17% | ||
Tolling Agreement | ||
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A general term used to describe an agreement in which one party (the toller) provides an input product to the other party, and the other party provides another product (usually derived from the input product) in return Detail In the energy sector tolling agreements may cover:
In effect a tolling agreement is a physically implemented spread | ||
Entry Capacity | ||
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Capacity to flow (usually gas) onto a National Transmission System Detail In order to flow gas on to a Transmission System a shipper needs to have Entry Capacity Entry Capacity represents a maximum flow rate that gas may be flowed onto a Transmission System over a period, and may be bought in long and short term auctions and traded bilaterally | ||
P&L atttribution | ||
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Let's say we added up the P&L of all our trades today, and then did the same tomorrow - the two values would probably be different - but why? Some reasons:
P&L attribution calculates the change in P&L for each of the above individually - and any other factors - so that the effect of each cause may be understood Detail The exact calculation is rather complex, for example if we want to know the effect of new trades, do we value them against yesterday's curve price or today's? If we use today's then in effect we have partially attributed some P&L change to the new curve price In general the P&L of each trade, or a netted exposure across a portfolio is is recalculated individually for each change that might affect the p&l (forward curve, fx rates etc), keeping each other effect constant Because each change is taken in isolation the the sum of all P&L attribution detail does not add up to the overall change in P&L... P&L attribution is often called P&L explained or P&L explainer | ||