SRCOM assists clients in effectively managing risk to minimize their exposure and generate value. Our extensive range of services covers various aspects of the trading ecosystem, such as commercial and trading strategies, operations, and IT implementation, among others. SRCOM supports its clients in comprehending and mitigating their exposure to risk in the commodity market.
Our Approach to Market Risk
We collaborate with all participants in the commodities and trading industry. Our services have grown to include commodities risk management and client work for a wide range of sectors, including utilities, oil and gas producers, metals and mining operations, agribusiness, and other industrial sectors. We also support merchant traders, commodities exchanges, brokers, data providers, and government agencies.
Our experienced trading risk consultants assist commodities traders in various industries. They help traders seize market opportunities by providing updated strategies, operating models, portfolios, IT systems, and more, to enhance value creation. Our approach includes:
- Creating strategies and models for marketing, sourcing, and trading.
- Implementing operating models for managing commodity risk, including governance, organization, business and risk processes, and IT systems.
- Enhancing insights and capabilities by promoting expertise, tools, and perspectives from different industries.
- Empowering clients' commodity trading and risk management organizations through the transfer of knowledge and ownership.
- Evaluating trading success using exclusive benchmarking instruments.
Clearing has effectively maintained market integrity and fulfilled its risk management role for numerous centuries. Presently, our clearing houses persist in safeguarding the global economy by ensuring secure markets and introducing fresh capital efficiencies to participants and end users.
Our Risk Management Framework
| Strict Membership Criteria | The initial and continuous conservative membership standards ensure the safety of your investments and safeguard your interests. |
| Initial Margin Collateral Condition | Margining every cleared position supports the integrity of the market. |
| Continuous Position Evaluation | Risk is effectively managed and available capital efficiencies are achieved by monitoring positions and margins throughout the day as the value and size of your positions change. |
| Intraday Mark-To-Market Margining | Cleared portfolios undergo daily reevaluation through settlement of variation margin or mark-to-market margin. Requiring clearing members to make daily payments for their losses helps prevent the accumulation of significant losses over time. |
| Special Margin Calls | Our clearing houses have the authority to issue special intraday margin calls if the losses from intraday positions exceed specific margin thresholds. |
| Extensive Default Resources | We keep a considerable amount of resources, including our own capital, as a precaution in case one of our members defaults. This helps to shield the default from causing damage to the wider market and global economy. |
| Complex Stress Testing | Conducting extreme yet realistic market simulations and hypothetical tests confirms that the available resources are adequate. |
| Extensive Transparency Standards | Our clearing houses function by following transparent and comprehensive sets of regulations, allowing you to have a clear understanding of the risks, fees, and obligations involved. The rulebooks for each of our clearing houses are available, and any changes to the rules are reported to the regulators. |
| Independent Risk Committees | The independent risk committee of SRCOM oversees the activities of the clearing house and ensures that necessary steps are taken to mitigate risks. They play a crucial advisory role in our risk mitigation practices and help safeguard market integrity while promoting innovation. |
| Market Promotion | We strive to strongly support financial reform that improves market efficiencies and risk management while avoiding negative outcomes like fragmented markets, reduced liquidity, or significantly higher costs for participants and end users. |
