Trayport, a leading provider of energy trading solutions to traders, brokers and exchanges worldwide, today announced the launch of Energy Market Access Gateway (EMA Gateway), its new pre-trade risk management system.
Trayport’s EMA Gateway is a flexible, scalable risk management system which is fully electronic and automated for ensuring only pre-checked orders are sent to an electronic OTC venue or exchange. It allows Prime Brokers and General Clearing Members to offer market access to those trading firms which may not have previously traded in European Energy markets due to the lack of available pro-active risk management controls or those needing risk controls in place in order to continue with existing connectivity. This pre-trade risk management system is anticipated to dramatically increase the accessible market for participants.
James Davies, Head of Sales at Trayport, said, “Improving access and developing energy markets are important goals for us. Risk management in commodities trading has historically focused on post-trade risk, often occurring well after the trade – this emphasis has now changed. To effectively meet expected regulatory and financial risk management obligations, credit providers are now focusing on pre-trade risk. The market has been asking for a pre-trade risk system that will allow them to trade within flexible risk constraints. We have been in discussions with a number of market participants to ensure that the system surpasses their needs - giving them confidence to grow their businesses, simplify market access and robustly control their credit exposure. Further this will allow better use of capital and the introduction of a more risk centered view of trading.”
The EMA Gateway commercial model is based on a transaction fee for each filled order that is risk managed by EMA Gateway, and only applies to orders explicitly being risk managed, such that the cost of the risk system is based on usage– neatly sitting alongside other associated risk charges such as clearing, exchange and execution fees. These risked transaction fees are subject to a minimum monthly commitment for licensing EMA Gateway on the trading firm’s activity across all venues that require EMA Gateway pre-trade risk management. These risked transaction fees will be standardized and published periodically to illustrate our consistent approach to supporting credit providers.
Trayport’s intention is not to introduce any new arbitrage opportunities between credit providers arising as a direct result of them offering direct market access via Trayport’s EMA Gateway. Similarly, in order to maintain a consistent approach across the venues accessible via Trayport’s Trading Gateway, the risked transaction fees are set by contract type and not by execution venue.
Trayport may establish direct relationships between itself and the trading firms, as well as relationships where their Prime Broker or General Clearing Member implements the system and levies the fees on behalf of Trayport.