Global Oil Giant Stabilizes Risk Management Capabilities Using K3
“We first implemented K3 to replace our existing CTRM API connections with the ICE and CME exchanges. The implementation process was a quick few weeks and we saw an immediate and dramatic improvement in the quality of our trade data within our CTRM. K3 gave us far greater flexibility to improve the quality of our trade data before it landed into our CTRM. K3 is fairly intuitive and easy to use, hence we now have internal SME’s that manage the mapping and logic conversions, with very little need for ongoing Broadpeak support.
We also implemented K3 to automate our trade reporting for Dodd Frank purposes, then the K3 position limits module, and finally we recently added routes to capture our order data for trade surveillance purposes. This has helped us visualize order patterns in order to meet requirements under European Market Abuse Regulation.”
-Manager of Crude Risk
Key Results
- Stabilized CTRM system via reliable trade feeds
- Compressed data feeds by 80% to improve batch calculation times
- Analysts gained control over daily trade flows
- Met regulatory deadlines with limited staff and expense
- Built surveillance program using certified K3 orders feeds
The Customer
Canada’s largest oil producer successfully completed a multi-million dollar project to implement a vendor risk system across their global enterprise. This system was to help manage both their physical trades as well as their growing derivatives trading business. Users had been onboarded globally and the business was moving forward on the single, central system.
The Challenge
Soon after go-live, their trading volumes grew, and more data was fed into the system. As a result, the performance degraded considerably. Batch calculations which initially took 1 hour slowed to 6 hours which hampered their business operations considerably. The firm was increasingly concerned about not realizing value from their significant investment. They initiated a remediation project, however with data feeds tightly coupled to the risk system, they had limited options. They explored additional hardware, fine tuning the database, staggering loads, all to no avail.
In parallel, the Compliance team faced a deadline to establish trade reporting to market regulators. In parallel to the performance improvement initiative, they were exploring vendor solutions to pull data out of their risk system and convert trades to send to the regulators. This time they were set on a solution which was outside the core system so they would have flexibility in dealing with technical challenges.
The Solution
As they looked to the marketplace for regulatory reporting, they decided on K3 and discussed their overall set of challenges with the BroadPeak team. For the immediate compliance needs, K3 could serve as a plug-and-play tool for pulling, transforming, and sending trade data to regulators. Additionally, they discovered that K3 could solve their performance issues with a single setting. K3 can compress data records on ingest to guard downstream consumers from information overload. Lastly, K3 could further benefit their compliance and risk teams by automating position limits management for the derivatives markets.
The firm assembled an internal project team of 5 people across IT, Risk, Compliance, and Operations along with two people part-time from BroadPeak to implement K3 across the board in 10 weeks. This project touched all aspects of their trade data from ingest to analysis to outbound reporting. At go-live, the internal team was able to take over running K3 fully as they drove the implementation. This alleviated them from a long training phase of getting people familiar with a new process or technology. K3 delivered immediate value for their investment.
The Result
On the ingest side, K3 was able to buffer their internal system and compress trade counts by 80%. As a result, they were able to disband the performance improvement efforts and gain immediate value from their global risk system.
For analytics, the risk and compliance teams were able to manage position limits with actionable visual dashboards. With a single click, they were able to dive into a position and have conversations with traders on how to manage activity as they approached the limits.
Reporting deadlines were met easily, and the operations team was able to keep things going as new trade types needed to be reported or new data elements were required by regulators.
Post-Script
With increased focus on trade surveillance, the firm’s compliance team has now licensed direct market orders feeds via K3. These feeds cover all their traders’ activities in the derivatives markets. K3 delivers an organized data set of this activity, which functions as the foundation of their internal surveillance program. The compliance team is now able to build custom tools to manage compliance requirements by regulators and also slice and dice the data to answer questions bespoke to their business.
