NYMEX OTC clearing: A viable solution for pricing

摘要

In the energy market a year ago, the focus was "price volatility." In today's market, the buzz word is "credit." At a recent energy conference attended by industry professionals nationwide, not a single speaker left the podium without mentioning "credit," myself included. As the number of financially healthy energy marketers dwindles, energy users are finding it increasingly difficult to find creditworthy counterparties to their physical transactions. Over-the-counter (OTC) deals are also increasingly difficult for the risk management and legal departments of both parties. It now requires a series of phone calls, e-mails, and faxes to pull together the necessary documents (ISDA's, bi-lateral agreements, etc.) and credit information for either side to have a sense of security in the transaction. Even then, both sides require daily monitoring of credit exposure over concern that counterparties will not be able to follow through with obligations.