- Assist in identifying and getting set up to trade with both the Exchange and large OTC hedging counterparties.
- Ensure that margins, strike prices and costs are reasonable.
- Provide real-time monitoring of energy markets, shopping, and execution of hedge targets established by Management.
- Review all trading confirmations to ensure accuracy and propriety of terms.
- Tracking and reporting of all hedge trades, as well as risk exposure, by counter party.
- Sharing of market intelligence and related current and historical data.
- Other risk or trading services, as required
Energy consumers and producers, as well as their bankers and investors, do not want their companies to hedge away any of their upside potential, yet they also hate to see too much downside exposure, especially when the company is forced to compromise on its core strategy and lose ground to competitors. As an example, an energy consumer might end up paying a high fixed price for his energy requirements while its competitors enjoy lower prices in the marketplace. The consumer might experience cash flow constraints, while its competitor is able to take advantage of acquisition opportunities to enhance its volume and profitability.
Companies must carefully consider its current and potential risk in terms of how price fluctuations affect the bottom line. Also, executives must have a clear understanding of the costs inherent in each hedging technique, margin requirements, and logistics of executing the hedge. The choice of a counter party and execution of the trade can be daunting to executives without trading experience and relationships. You may not know whether you are paying too much, or that your strike price is reasonable. In the fast-moving environment of energy futures, options, forwards, and Over-the-Counter (OTC) transactions, the answers are not always intuitive to Management personnel who do not have the available time or experience to be a full-time trader.
Coquest Structured Products, Ltd. offers risk management consulting services to provide these answers to Management, and to ensure that execution of hedge transactions are accurate and competitive in the current volatile markets. Our experienced team of professionals have over a half-century of experience in trading NYMEX energy futures and OTC derivatives, as well as established relationships with major OTC market-makers, including banks and investment houses. Their experience and relationships have enabled Coquest to enjoy a track record of beating client targets, on average, which translates to additional bottom-line profits for our clients.