In the world of energy trading and risk management (ETRM), Separately Managed Accounts (SMA) offer a flexible and customisable approach to managing investments. If you are an investment manager trading in commodities, with Brady’s SaaS ETRM solution ‘Igloo,’ you can utilise SMAs to segregate capital, track performance, and align investments with individual goals.
Flexibility in Account Management
Igloo provides significant flexibility in managing accounts to meet diverse investment goals. Each account can be tailored to specific objectives and risk levels, whether it’s equities, fixed income, or commodities. This customisation ensures that investments align closely with individual objectives, enhancing goal alignment.
Efficient Trade Management
ETRM platforms such as Igloo allow for the setup of multiple managed accounts (funds). The allocation process, which occurs post-market close, distributes the stipulated volume across the SMA at the trade level based on pre-defined splits and configurations. Igloo supports both Future Commission Merchant position cognisant allocation and manual allocation, enabling efficient trade management.
Trade Allocation
In ETRM systems, Direct Market Access Swaps are split in real-time as they flow into the platform, using the splits defined for each managed account. Exchange-traded futures and listed options are allocated as part of the close-of-business jobs per market. The allocation workflow amends the original trade and books new trades in other managed accounts based on the defined splits, facilitating accurate and efficient trade allocation.
Risk and Performance Monitoring
Effective monitoring is crucial in ETRM. Each SMA is independently tracked for performance, risk, and key metrics such as Value at Risk (VaR), P&L, and capital utilisation. This separate monitoring helps ensure that every account adheres to its risk tolerance, facilitating informed decision-making.
Reporting
Igloo provides comprehensive performance reports, offering insights into P&L, portfolio composition, and risk metrics. Key features include:
- P&L Overview: Displays daily, monthly-to-date (MTD), and year-to-date (YTD) profit and loss figures.
- Portfolio Summary: Provides a snapshot of critical portfolio data, including starting and closing assets under management (AUM), margin requirements, and capital utilisation.
- Risk Metrics: Offers visibility into key risk exposures, such as net and gross exposure.
- VaR Analysis: Displays Value at Risk (VaR) figures for different time horizons.
- Allocation Distribution: Reports on account-level performance, showcasing expected returns and PnL ratios.
SMAs in Igloo provide a robust framework for managing diverse investment goals. With flexible account management, accurate trade allocation, and comprehensive risk and performance monitoring, Brady’s Igloo ETRM SaaS solution gives you peace of mind that your investments are closely aligned with objectives and risk tolerances. Click here to learn more.
