This article first appeared on Commodity Technology Advisory’s CTRMCenter™ and is written by Patrick Reames, Founder of Commodity Technology Advisory.
We recently visited with the team at Quantifi, including Sachvir Cheema, Director of Business Development, to get a briefing and a demo covering the firm’s activities and solutions in the commodities markets.
Originally founded in 2002 as a risk and analytics provider to the financial trading markets, the company quickly built a global presence in the capital, asset management and insurance segments. Quantifi indicates they service over 180 clients across 40 countries, and includes in its client roster dozens of regional, national, and global scale banking, investments and trading firms, including 2 of the top 5 ag trading companies.
It is these two global ag trading companies that pulled Quantifi closer to the commodities markets as both sought to enhance their ability to manage credit risk and analytics. With these firms’ support, Quantifi fully embraced the challenge and successfully expanded their product footprint to address the valuation complexities unique to the commodity markets. Now, with several hedge funds and global-scale commodity trading firms using their products to manage Counterparty Credit Risk and analytics in the softs and ags markets (and with plans to move into metals and energies), Quantifi has become a recognized player in the industry.
Known as the Commodity Counterparty Risk Management (CCRM) solution, Quantifi’s product provides exposure vs limits reporting, what-if analysis, and stress testing, and includes PFE and CVaR analytics. After the demo of the product, we walked away impressed with the system’s usability and screen designs. In particular, their capabilities and user interface in the area of scenario testing was perhaps as strong as we’ve seen, with well laid-out screens and solid supporting graphics. Additionally, the product showed very good workflow management capabilities to better manage counterparty on-boarding, including establishing relationship hierarchies and credit grading/updating, and in collateral management. The CCRM workflow engine also delivers a comprehensive audit trail. Though, like most of its competing solutions, it does not yet incorporate the emerging need for climate risk measures, it does manage country risk, concentration, and portfolio-level risks.
CCRM makes extensive use of dashboards that are tuned for specific user roles. We were shown one, for example, that was aimed at the CRO. This aids in usability by allowing certain roles to see in a relatively intuitive way only the information they need to see to manage their job and to drill down into that information. Reports can also be user configured and maintain a similar look to these user-focused dashboards.
Though CCRM is currently somewhat limited in its commodity coverage (as each commodity has unique functional/valuation requirements), for many softs and ag commodities it does appear to be a strong offering (though currently with limited CSA coverage). And, with their stated commitment to additional development, we do expect them to also be competing well in the energy and/or metals markets in the not-too-distant future.