Oil Derivatives Trading
Over 90 percent of refined oil financial derivatives are still traded via voice and IM communications where traders may need to process up to 5,000 `shout-downs` from around 50 brokers in an average trading day, while simultaneously dealing with more than 20 digitised information sources.
London, England-based Sphere realised that in this environment, using traditional trading systems, liquidity and price remain undiscovered. Bids and offers are left undone. Perfect trades are not executed. Trading volumes reduce. Confidence in the market diminishes. Relationships across the trading community wither. And so liquidity dries up, which means opportunities to profit disappear, alongside trader earnings and, ultimately, jobs.
Working with Categorical, Sphere’s Category Point of View re-framed traders’ expectations to deliver one place where traders can clearly see ALL market opportunities. Where second-by-second, traders can rapidly combine external inputs with their market experience and intuition, to clearly price and confidently discover where value is hidden.
This service, delivered on a single screen, would unite isolated liquidity pools, comprehensive market data and reveal never-before-seen insights driven by AI and quantitative analysis. A different kind of product consolidating mixed messaging formats and translating them in real time to normalised structured data to bring voice and electronic markets together in one place.
Sphere is building the world’s first Liquidity Lake – a Category creating a single unified virtual market encompassing all available liquidity and data pools, and where all liquidity is discovered, analysed and traded easily and reliably. This complements even the best traders, combining the ease and opportunity of screen trading with the speed and convenience of the voice and IM market to let their instincts flow.
The first Category strike for Liquidity Lake was at the Asia Pacific Petroleum Conference (APPEC) in Singapore. Word spread rapidly and the initial launch was four times oversubscribed by guests.
Already in use at the world’s top trading houses, oil majors, energy companies, proprietary traders, and leading energy brokerages, proven in refined oil derivatives trading, the Liquidity Lake platform will be applicable in Category expansion to other institutional markets; where liquidity and data are often splintered and scant, anywhere where the impact of fragmentation, limited execution choice, and information scarcity on trading and risk management is felt.