Commodity trading & risk management

The hard-hat world of the power & utility industries and the hard-ball world of financial trading have progressively become more intertwined.

Greater liquidity, increased participation of financial players, new types of exchanges and new types of commodities, such as emission rights, have all contributed to the growing importance of the use of financial instruments and, in some sectors, trading.

Companies are increasingly engaging in trading to improve and add more flexibility to their asset position. The increase in commodity trading in markets affecting power & utility companies has an impact on short- and long-term contract prices, on price volatility, on the choices faced by end-customers and on the regulatory landscape governing markets.

These changes are producing new types of risk for companies that require a re-examination of their risk strategies and the way they conduct their risk management.

PwC can help you

PwC has a global expert team dealing with commodity trading and risk management within the power & utilities industries.

  • Setting the right strategy – We can help you develop clear policies and strategies to understand and engage with the market environment in ways that are consistent with your commercial imperatives and risk appetite. We can help you align your activities to fit with market changes and new developments.
  • Managing risk effectively – We can advise on the risk frameworks, controls and systems that need to be in place to manage risks and opportunities effectively.
  • Implementing trading processes and systems – We can design and assist with the implementation of trading processes, support selection and roll-out of the best trading systems, improve the effectiveness and efficiency of trading execution and test/audit trading control frameworks.
  • Governance, accounting and compliance – We advise on a wide range of requirements to ensure you are compliant with regulatory requirements, have effective governance in place and understand and manage the accounting and tax impact of any trading or use of financial instruments.