ETRM & CTRM Glossary, Energy & Commodity Trading

Trade Capture view module →

Trade capture: The process of booking a trade with its economic terms, instrument, quantity, price, delivery, and counterparty, as the first step of the lifecycle.
Physical trade: A trade that results in actual delivery of the commodity, such as gas through a pipeline or a cargo of crude.
Financial trade: A derivative (future, option, or swap) that settles in cash against a reference price and does not result in delivery.
Leg: One component of a multi-part trade. A swap or spread is captured as multiple legs, each with its own terms.
Counterparty: The other party to a trade. Counterparty reference data and credit limits are attached during capture.
Reference data: The master data, instruments, books, counterparties, calendars, locations, that trades are validated and enriched against.
Validation: On-entry checks that enforce required attributes and reference-data integrity before a trade is booked.

Mark-to-market (MtM): Valuing open positions at current market prices; the change in MtM is unrealized P&L.
Fair value: The current market-based value of a position or instrument.
Inception (day-1) P&L: Value recognized at trade time when a deal is struck away from mid-market.
P&L explained: Attribution that decomposes the change in value into drivers: price, curve, time, FX, and new trades.
Forward curve: The set of prices for delivering a commodity at each future date; the key input to valuation.
Volatility surface: The set of implied volatilities across strikes and maturities used to price options.
Discounting: Adjusting future cashflows to present value using interest rates.

Value at Risk (VaR): The estimated maximum loss over a horizon at a confidence level under normal conditions.
Expected Shortfall (CVaR): The average loss given that losses exceed the VaR threshold; describes tail severity.
The Greeks: Option sensitivities: delta, gamma, vega, theta, and rho.
Delta: Sensitivity of value to a move in the underlying price.
Gamma: The rate at which delta itself changes as the underlying moves.
Cross-gamma: How a position’s delta to one contract changes when a related contract moves.
Vega: Sensitivity of an option’s value to changes in volatility.
Scenario analysis: Revaluing the book under specified market moves to see the impact.
Stress testing: Applying severe but plausible shocks to test resilience beyond normal VaR.
Limit: A cap on exposure (position, VaR, or credit) monitored against live positions.

Nomination: A formal notice of the volume to be delivered or received over a period.
Balancing: Reconciling scheduled versus actual delivered volumes and resolving imbalances.
Imbalance: The difference between nominated and actual delivered quantity.
Logistics: The physical movement of a commodity, pipeline, grid, vessel, or rail.
Grid / pipeline integration: Connecting scheduling to the operator systems that move physical volume.
Title transfer: The point at which ownership of the physical commodity passes between parties.

Settlement: The process of turning a completed trade into cash, invoicing, matching, and payment.
Invoice: A billing document generated from trade and delivery data.
Reconciliation: Matching invoices, payments, and trade records to confirm they agree.
Cashflow: A projected or actual movement of cash arising from a trade or settlement.
Dispute resolution: The workflow for handling settlement discrepancies between counterparties.
Ledger / GL integration: Posting settled cashflows into the general ledger or ERP.

Source of truth: A single governed data model that every function reads from, so reports reconcile by construction.
Regulatory reporting: Producing datasets required by regulation, such as EMIR or Dodd-Frank.
Position reporting: Reporting net and gross positions by book, commodity, and tenor.
Star schema: A dimensional model with a central fact table joined to conformed dimensions; the basis of a BI mart.
Conformed dimension: A shared dimension (instrument, book, counterparty) used consistently across every mart.
Fact mart: A star-schema table of measures at a defined grain, e.g. position, P&L, or cashflow.
Slowly-changing dimension (SCD Type 2): A dimension that keeps history so data can be queried as-of any past date.
Lineage: The traceable path from a mart row back to the source trade, curve, and version it was built from.
OLAP: Online Analytical Processing, fast, multidimensional querying of the marts by BI tools.
ETL / ELT: The extract-transform-load process that builds the marts from the trading model.

ETRM: Energy Trading and Risk Management software, the platform category for energy commodities.
CTRM: Commodity Trading and Risk Management, the same category extended to the broader commodity set.
Trade lifecycle: The journey of a trade from capture through valuation, risk, scheduling, settlement, and reporting.
Straight-through processing (STP): Carrying a trade through every step without re-keying or reconciliation.
API-first: A design where every capability is exposed as a governed API for integration.
Governed data model: A single, controlled model of trades and reference data that all modules share.
Multi-tenant: An architecture where one platform securely serves multiple isolated tenants.

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