A New Player in Energy Credit Risk Emerging

August 4, 2008 — Today we were featured in an article by Patrick Reames on ETRM.com, the ETRM Software Community website. For this interview, we discussed our new Vanguard product line, and leaked a few details about its framework and abilities. The full article is quoted below.

I recently had the opportunity to meet with two veterns of the ETRM space, Jason Wells and Kevin Gerold. As those that have been in this industry for a while may know, both of these gentlemen started with Nucleus in that company’s formative years and transitioned to Caminus after the acquisition. Kevin served as Senior VP of product development at the two companies and Jason was involved in consulting and implementation for the companies’ various ETRM products. Having left Caminus prior to SunGard acquiring the company, Kevin began consulting at a number of energy companies and became involved in helping those companies develop credit risk functionality. Within the last year or so, he decided to more fully leverage his experience and joined back up with Jason to begin the development of a next generation credit risk solution.With Raft having been acquired by Financial Objects in early 2006 and Rome being picked up by Triple Point just last month, the timing seems to be right for someone to set up with an independently developed and marketed solution for country party credit risk management. With energy commodity prices swinging wildly every day, but generally in an upward trajectory, counter party credit exposure is once again coming to the forefront in enterprise risk management.

They are calling their new system Vanguard, and while it’s not yet in production use at a client site, they assure me the system is complete, functional, and has seen significant interest from several potential clients. Given their past track record of success at helping build Nucleus as a solution and a company, I wouldn’t bet against them.They provided me the following details around Vanguard: It’s running on .NET with an Oracle database. The system provides full counter-party capture and management capabilities, including contract management, collateral management, and credit scoring. It can manage and value credit risk on multi-commodity, multi-currency positions. The system also provides multiple potential future exposure (PFE) methods, including Monte Carlo and Black Sholes, in addition to the standard credit value at risk (CVAR).I haven’t seen the system, but given these guys experience and reputation, I suspect they will be able to deploy a very strong independent offering in the credit risk space.