Reports The Use of Spreadsheets in Commodity Trading | Page 3

The Use of Spreadsheets in Commodity Trading – 2015

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Executive Summary
Spreadsheets have long been an integral part of a
trading company’s armory of tools and software. Over
the years, the demise of the spreadsheet in commodity trading organizations has continued to be predicted with increasing frequency and regularity, and yet,
the spreadsheet is alive, well, and kicking in 2015;
as this survey proves. Despite the growing maturity
of commercially available Commodity Trading and
Risk Management software (CTRM) solutions, the
increase in regulation and oversight and, the alarming number of horror stories involving spreadsheets
in losses, mistakes and fraud, they seem difficult to
eliminate. This survey, prompted by current round of
regulation and controls, revisits the spreadsheet in
commodity trading to discover how widespread and
pervasive they are and why.

The survey was conducted as an electronic questionnaire
promoted via Commodity Technology newsletter and other
email lists as well as on social media and the CTRMCenter
website. It received 133 responses between early November
and mid-December, 2014, which after eliminating incomplete
responses or those submitted anonymously, was reduced to
a set of 50 valid responses from identifiable participants. The
distribution of the valid responses was primarily from Europe
and North America and from across the entire commodity
trading sector.

The survey found that spreadsheets are widely used in
commodity trading firms, especially in business functions that
can be considered less mature in terms of commercial software offerings such as risk management, operations planning,
origination and scheduling, where between a quarter and a
third of all respondents claimed to use them extensively. It appears that the spreadsheet is simply too convenient and easy
to use at a low cost to eliminate entirely. The most given reason
for using spreadsheets was that it is simply faster and easier to
do so. On the other hand, the lack of an audit trail, regulatory
issues and risk of error were amongst the most widely cited
disadvantages.

Incredibly, almost all of the respondents were concerned
to some degree about the use of spreadsheets at their firm.

More than 40% of the respondents said that they were very
concerned and almost 7 out of 10 respondents said that they
knew of a horror story involving spreadsheets. Many of the respondents provided examples of horror stories that included
cut and paste errors, lack of version control, sorting errors and
integration issues.

The survey also asked about the applications utilized in
the business and about satisfaction levels finding a wide variety of commercial applications being used and that most users
were ‘satisfied’ with their solutions. However, when asked if
their solution had effectively eliminated spreadsheets, only a
minority could report that as the case. More than half claimed
to still utilize spreadsheets extensively.
This study makes for sobering and thought provoking reading.
While the respondents understand the vast range of potential for issues with spreadsheets, they also find their ease of
use and convenience compelling, and that they are very hard
to eliminate even when bringing in commercial software. The
risk posed by this situation has always been there but with the
greater regulatory oversight and focus on the sector generally,
the magnitude of the issue is increasing.

ComTech’s view is that spreadsheets as tools have a role.
That role is one that should be governed via well reasoned and
thought through risk management policies and it should be
limited to none mission critical areas of the business as much
as is feasible. It is difficult, if not downright impossible, to eliminate spreadsheets from the commodity trading and risk management environment, but there is a lot more that can be done
to minimize the risks involved in their use.

© Commodity Technology Advisory LLC, 2015, All Rights Reserved.