Research European Commodity Market Regulations - Part 1

European Energy Market Regulations V3.1 TriOptima triReduce Multilateral termination removes transactions and consequently reduces the need for collateral requirements by keeping portfolios trimmed down. Participating in triReduce cycles reduces both the regulatory and economic capital costs associated with OTC derivatives, especially for capital-intensive emerging market transactions. Periodic compression will eliminate capital charges for risk-weighted assets appearing on the balance sheet. With fewer outstanding OTC derivative trades, a firm can manage its current exposures more effectively by reducing collateral management costs and minimizing balance sheet growth. Compression will also facilitate managing potential future exposure for transactions that cannot be collateralized. When trades are eliminated, they no longer require periodic payments to be calculated and settled, reducing operational costs. In addition, potential errors and the costs associated with resolving errors, including operational risk capital charges, are eliminated. Using a multilateral system offers a great advantage over bilateral compression since the amount compressed can be a lot higher. A multilateral system is only useful if it has critical mass, which is an advantage of TriReduce. By August 2013, TriOptima’s 230 triReduce participants (including major energy houses and dealer banks), have eliminated $354 trillion in notional principal outstanding in IRS, CDS and Commodities.. The impact on the interdealer notional outstandings as reported in the DTCC Trade Information Warehouse and the BIS statistical surveys has been significant. triReduce is a web-based service that does not require any software installation or elaborate preparation. The service is accessible to institutions with a qualifying portfolio. Vendor: TriOptima - http://www.trioptima.com Trade Surveillance We are aware of three trade surveillance solutions for commodities but there are many more for other asset classes that most likely will be made available for commodity market players use in time. SunGard Protegent Protegent Surveillance helps market participants mitigate reputational, internal and regulatory risks. With Protegent Surveillance, firms can detect suspicious trading activity and address supervision and suitability requirements. The solution helps firms identify © Commodity Technology Advisory LLC and ETR Advisory Ltd, 2013, All Rights Reserved. v3.1 November 13th, 2013 44

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