Energy Trading & Risk Management
Monaco
Monaco®, Ventyx's energy trading and risk management (ETRM) solution, allows organizations to measure and monitor the risks associated with commodity positions resulting from operations, including natural positions (such as load and generation) and positions resulting from bilateral agreements. Moreover, Monaco allows organizations to improve operational efficiency and control while providing a lower total cost of ownership than competitor products.
Monaco provides an integrated front-, middle-, and back-office solution that captures physical, financial, and asset transactions across all energy commodities. In addition, Monaco offers:
- True straight-through processing
- Thin client structure for fast implementation and easy maintenance
- Advanced architecture for scalability
- Seamless, real-time results
- Real-time credit and trading limits monitoring
- State-of-the-art risk analytics using Risk Drill
- Convergence of mark-to-market projections to actual results
- Advanced valuation algorithms, including Monte Carlo and custom proprietary algorithms
Key Features
FRONT OFFICE
Multi-commodity Transaction Capture
Monaco's flexible Deal Capture module captures even the most complex transactions. Physical Fixed, Index, Monthly Options, Daily Options, Hourly Options, Transmission/ Transportation, Exchanges, Futures, Swaps, OTC Option, and Swaptions are just some of the transactions that can be captured. The Profile Transactions even allow integration with load and generation forecasting tools for true consolidated position reporting.
Comprehensive Forward Market
Assumption Capture
Capturing relevant market assumptions is critical to managing a company's risk and return. Monaco allows users to import or enter all data assumptions necessary to accurately model a portfolio: forward and spot curves (commodities prices, weather, interest rates, basis, FX rates, etc.), volatilities, and correlations. Correlations and volatilities can also be calculated by the system using historical information.
Closed-Form and Monte Carlo Valuation
Each time a deal is entered or edited, it is immediately valued with current market information, using either a closed form or Monte Carlo approach. The updated information is immediately available to all functional groups, allowing users to see the impact of new positions as they are entered. Moreover, as transactions are entered or modified, the system automatically checks the associated trading and credit limits and generates violation emails.
Forward Position and Value Analysis
Unlike other ETRM systems, Monaco values every transaction all the way through delivery. This provides a single consolidated source for position data regardless of the timeframe under review (historical, spot, forward). In addition, it ensures an accurate valuation of the current month and forces convergence of forward mark-to-market projections to actual results.
Scheduling & Pathing
Monaco's Nodal Scheduling module allows users to quickly balance their portfolio without having to endure the burden often associated with "repathing." The Volume Imbalance screen provides a quick real-time overview of the company's physical balance for any period and delivery location, allowing a user to quickly identify the schedule needing adjustment. Moreover, Monaco allows users to monitor capacity, to assign flows to specific transport agreements, and to book-out transactions all from a single screen.
MIDDLE OFFICE
Contract Administration
The Contract module allows users to capture contract-related information, such as the form of the agreement, term, termination and renewal provisions, damages, and more. Also, users can capture information necessary for the confirmation, credit, and accounting processes.
Confirmation Generation and Tracking
The Confirmation module lets users generate confirmations and track them through user-defined confirmation stages. The confirmation process includes the ability to lock confirmed transactions to prevent unauthorized edits.
Credit Management
The Credit module provides comprehensive capabilities to define credit ratings, assign limits, capture credit agreements, and monitor risk level and limits. Moreover, Monaco tracks both credit exposure and liquidity. Credit managers can perform risk analysis in real time and receive email notifications in the event of credit limit violations.
Forward Cash Flow, Risk Analysis, and Advanced Risk Analytics
Monaco provides the advanced risk analytics required to meet best practices in risk control, exposure management, and portfolio analysis. Position Summary provides an overview of the exposures and positions within the portfolio. Risk Drill provides the capability to quickly analyze a portfolio across numerous risk metrics and reporting dimensions at a very detailed level. Monaco also includes Value at Risk functionality (Monte Carlo, historical, and parametric) as well as Cash Flow at Risk (revenue, profit, etc.). Finally, the Reconcile Changes functionality allows users to investigate the causes of changes to portfolio value.
BACK OFFICE & OPERATIONS
Counterparty Checkout
Monaco's Counterparty Checkout screen provides users with the ability to quickly validate both physical and financial flows, allowing users to see totals by counterparty or drill down to an individual period's flow. Accounting users can also lock schedule and financial information at the lowest level to ensure that verified data cannot be modified after the checkout process.
MTM / Actual Convergence
Ventyx recognizes the difficulties associated with actualizing mark-to-market values following the month of flow. This problem is compounded in many companies because spot flows are tracked in a different system than forward flows. In Monaco, the same flexible data model is used to capture forward, spot, and actual flows; our single valuation module calculates both cash flow and mark-to-market value. This allows for the generation of both accrual-based and mark-to-market income reports from the same dataset, thus eliminating the large task of reconciliation.
FAS-133 Compliance
Monaco's FAS-133 module allows users to identify individual transactions for hedge purposes and to associate those transactions with hedge strategies. Users can define which types of transactions and locations can be associated with individual hedging strategies. Monaco supports several effectiveness-testing methods including dollar offset and price correlation.
Management Reporting
Monaco's flexible data model allows comprehensive online reporting capabilities for all business functions. Users are provided with the report development tools necessary to generate custom reports. User-created reports can be added to the report menu and secured using standard Monaco security.
Business Benefits
Monaco can be deployed as a standalone application or as part of an integrated operations suite. In recent years, Monaco has been recognized as one of the top ETRM solutions in the energy industry. Some key benefits include:
- Lower Cost: Beginning with quick implementation and including ongoing support and maintenance, Monaco offers the industry's lowest total cost of ownership.
- Transparency: From the Trader to the Chief Risk Officer, data is viewed from a consistent source and transactions are valued immediately.
- Real Efficiency: Monaco provides operational efficiency via straight-through processing and its single data source approach.
- True Flexibility: Monaco is built using a multi-tiered, distributed architecture for maximum scalability and performance, which allows for portfolio growth and user increases.
- Open Architecture: Monaco is browser based and uses XML as the data transfer mechanism between tiers.
