In July 2018, Brady was recognised as the energy trading and risk management software market leader (aka the ETRM Behemoth) in the Energy CIO Insights, ETRM special.
This month the editors from CIO Advisors interviewed our Chief Product Officer, Senior Software Engineer and Head of Credit Risk for inclusion in the leader board of ‘TOP 10 Enterprise Risk Management Companies of 2018’.
“Risk management is often overlooked, despite being a vital component of the energy and commodity trading industry,” begins Libby Koehn, Chief Product Officer at Brady PLC. By specializing in mitigating such challenges Brady PLC has taken pole position while perfecting a precise concoction of trading operations, governance, and risk management controls through its suite of trading and risk management software solutions.
Brady’s proficiency in the energy and commodities risk management (E/CTRM) space is built on a suite of products that help customers to manage their commercial decision-making and market execution processes, ensuring more complete management accountability for decisions so that they are made in accordance with a firm’s risk policies.
Brady Accountability Compliance (BAC)
“One of the vital factors that drive an organization’s success is the reputation it builds over time through trades and engagements. However, such reputations are easily tarnished when an organization fails to meet its stakeholder or customer obligations. Most reputational risks stem from a lack of corporate governance. At Brady, we’ve addressed the topic of reputational risk by expanding our product portfolio to include a new solution that manages reputational risks,” explains Libby. The company’s products enable decision makers to automate their operational workflows, assess risks associated with multiple organizational layers, streamline decision support and proactively manage market trade execution tasks and liquidity, while additionally supporting the needs of energy and commodity companies by helping them meet new, more robust regulatory and governance control requirements.
Brady CTRM / ETRM
Aleksandar (Sasha) Cvetkovic, Senior Software Engineering Manager at Brady, explains that trading companies have a specific need and a strong demand for solutions that help them to understand and model physical and financial commodity instruments. These solutions ensure that risks are accurately assessed, so that customers have the data they need to decide on suitable actions.
Brady’s competency in delivering a configurable engine that models risk measurements and profit and loss is essential. Furthermore, Brady excels in employing a unified engine that automates trading of energy and commodities operations. While machine learning-driven automation eliminates extensive labor requirements, minor hindrances in automation can cause catastrophic problems, affecting the entire workflow of a trading firm. Brady averts such setbacks by placing risk management at the center of its solution portfolio to obtain a bird’s-eye view of an entire business.
Brady Credit Risk (BCR)
BCR is a specialized credit risk solution for the Energy and Commodity markets, that can be delivered on-premise or hosted in the cloud. Brady Credit Risk Product Owner, Ian Tobin, says “Our credit risk solution has always had best of breed functionality, but our primary focus has been to improve the user experience and pro-actively deliver alerts and the relevant credit risk information that each user specifically wishes to see. This enables users to react to high risk events that require immediate action and to better optimize their daily workflows.”
BCR measures counterparty exposure, detailing a hierarchical view of Mark to Market (MTM) and settlement risks within legal and guarantee hierarchies. Organizations can view Potential Future Exposures (PFE) and execute pre-deal checks using a variety of methodologies, such as simple add-on’s, parametric models or using Brady’s Monte Carlo simulation engine. BCR also allows Over the Counter (OTC) margining through credit support annexes and associated netting structures, automating user’s workflow at critical stages of the margining process.
One of the many distinguishing features of BCR is that it offers configurable models facilitating internal scoring of counterparties based on a set of quantitative and qualitative questions. A counterparty’s financial information can also be imported electronically or entered manually. A separate reporting layer allows clients to build their own reports or to use the standard BCR reporting suite that is linked to Power BI and Tableau for improved data visualization.
In the near future, Brady plans to incorporate distributed ledger technology and machine learning capabilities to enhance its capabilities in the E/CTRM landscape still further. “We are aware of the potential risks prevailing in this sector, and they are addressed through our solution sets natively. We not only implement comprehensive risk management strategies in our products but we also help our customers to manage and address the risks connected to the market changes in a proactive manner,” concludes Koehn.
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Brady is proud to announce that it has retained its number one position in the metals space as this year’s CTRM vendor perceptions study carried out by Comtech Advisory Board. The report confirms ‘Brady PLC was noted as the market leader by 56% of the respondents, well ahead of runner up ION Openlink with about 15%’.
Comtech Advisory Board’s MD, Gary Vasey, further commented:
In the 2018 Vendor Pereption Study, a backward looking view of brand perception and buying criteria in the CTRM software category, Brady PLC has retained a strong level of brand awareness generally while extending its perceived market leadership in metals. It also shows up in a number of other categories as a perceived leader including Soft Commodities. Overall, Brady has maintained strong awareness in the space.
The 2018 Commodity Technology Advisory’s vendor perception study was conducted to establish end-user and market influencer perceptions of the CTRM vendors to determine market leadership perceptions as well as buying criteria, demand levels, and brand awareness of the different vendors. The research comprised of a comprehensive set of questions that end users and others (including industry consultants but excluding vendor personnel) were invited to answer as an internet survey. The survey was open for responses between May 21st and September 30th, 2018 and collected some 195 responses.
Please click here for the full report
StockMarketWire.com – Brady said Monday it expected full-year performance would be in line with market expectations as first-half losses narrowed Monday despite roughly unchanged revenues.
For the six months to 30 June, the company reported a pre-tax loss of £2.3m compared with a loss of £3.7m a year earlier and revenue was roughly flat at £10.5m.
Adjusted earnings (Ebitda) for the first half of 2018 was a £0.4m loss compared to a loss of £1.2m for the first half of 2017.
Revenues were weighed down by reduced growth from services including development to £1.63m from £2.2m the previous year, while software licenses jumped to £1.10m from £0.58m. The company said full-year 2018 results expected would be in line with market expectations.
‘We are confident that the business will scale efficiently and deliver significant improvements in profitability and cash generation in the remainder of 2018 and beyond. With 95% visibility of our 2018 revenues and a cost base that is now aligned with our strategic goals, we expect our full year results to be in line with market expectations,’ said Ian Jenks, Executive Chairman.
At 9:02am: [LON:BRY] Brady PLC share price was 0p at 66.25p
Story provided by StockMarketWire.com
“This has put us on a strong footing reflected in the fact that we have also secured new contract wins and retained all business that came up for renewal during the period.”
“We are doing exactly what we said we would, including an investment in new products, the removal of costs, creating long-term solutions with the customer at the centre and a continual transition away from the group’s legacy contract model,” said Ian Jenks, executive chairman.
“This has put us on a strong footing reflected in the fact that we have also secured new contract wins and retained all business that came up for renewal during the period.”
Turnover for the half year to June was flat at £10.5mln, while underlying losses dropped to £424,000 from £1.24mln. Interim losses were £2.04mln (£3.52mln). Four new contracts were renewed in the first half worth £2.8mln, with two additions worth £0.6mln. Gross margins improved slightly to 55% while recurring revenues held at 74% of the total.
“With 95% visibility of our 2018 revenues and a cost base that is now aligned with our strategic goals, we expect our full year results to be in line with market expectations,” added Jenks.
The Senior Managers Regime (SMR) is a part of UK financial regulations aimed at increasing the personal accountability of senior people in the financial services industry. It came into effect in March 2016 and covers both domestic and international firms with UK operations, and is due to be extended to cover a broader part of the market in late 2019. Almost certainly, similar regulations will be introduced in other geographic locations too in North America and Asia.
According to David McNair Scott, CEO of Trailight, the regime incorporates three elements requiring firms and accountable managers to produce a map of accountability and the governance structure around it, incorporates a reverse burden of proof essentially requiring firms to track decisions, and the requirement for firms to identify and assess the fitness of employees which could cause significant harm to the firm, customers or market. The regulation, in summary, requires identification of who is accountable as well as to assess and insure an understanding of, and compliance with, conduct rules. It also requires reporting of any breaches and the onus is on the firm itself to demonstrate compliance. It’s a tall order and it’s coming to the commodities industry very soon – at least in the UK, while Hong Kong, Singapore and Australia have launched similar initiatives. According to Mr. McNair Scott, when the banks went live in preparation for the regulation, many were not using an automated solution and they ‘ had a nightmare’ dealing with it.
In the coming months, energy and commodity firms will also need to plan for, and tackle this regulation in the UK. Trailight offers an automated solution that ‘helps to derisk’ the business. The software is cloud-based and in partnership with Brady PLC, the solution will be offered tailored to the energy & commodities world via a strategic partnership recently announced. “The bedrock of the Accountability regime is a focus on individual sanction. This means that in any investigation Senior Managers have to provide transparency on their accountabilities and responsibilities and show evidence that they have taken ‘Reasonable Steps’ to meet those accountabilities. Critically the regime goes further into mandating Senior Management responsibility for the Fitness, Proprietary, and competence of key staff and requires companywide attestation, understanding and day to day application of minimum standards of conduct,” says the news release.
Brady is first to market with a white labelled version of the Trailight solution, Libby Koehn, CPO of Brady PLC, told me. “The solution offers an automated solution in the cloud to help meet the requirements of the regulation. Many of our impacted customers know that the regulation is coming but haven’t yet solved the issues related to compliance. The Brady/Trailight solution represents a cost effective and very intuitive way for them to do so. Together, Trailight and Brady plc are empowering customers to manage risk with innovative products and tools that evolve, as business gets more complex. These pioneering solutions help our customers to stay ahead of the curve. Brady’s Accountability Compliance solution was designed specifically to provide the control, intelligence, data and clarity needed to make informed business decisions and the evidence needed to show that ‘reasonable steps’ have been taken to manage accountability throughout the firm – and to comply with the Senior Management Regime, Certification Regime and Conduct rules“.
This article appeared first on CTRM Center.
Ian Jenks, executive chairman of Brady Plc (LON:BRY), tells Proactive’s Andrew Scott they’ve managed to cut losses in the first six months of 2018 as the benefits of restructuring measures taken last year began to come through.
”It’s been an excellent six months … and at one level it’s been reassuringly boring … it’s nice to tell the market what you’re going to do and then do it”.
For someone who has weathered the tumultuous enterprise software world for more than 20 years, Libby Koehn is brimming with unique ideas for innovations that can drive business success. Not only did she found a software company, but she took it across international waters and grew it into a global brand. Throughout her entrepreneurial journey, she has overseen product management and operations functions at several prominent software companies.
The Chief Product Officer of Brady PLC, Libby joined the company in October 2017 and is now responsible for leading day-to-day strategizing, services delivery and execution for all product and software development-related activities, including the research and identification of long-term market, needs that Brady must address in order to generate the highest value and return in the markets. Brady entered the energy space in late 2010, which was a natural progression for the firm as the Company estimated that more than 60 per cent of its customers were actively trading energy. The company has since established itself as the market leader in this landscape. One prime reason for this success is the Company’s relentless pursuit of comprehending its clients’ needs and evolving its products accordingly.
An expanding need to manage short-term volatility and exposure, driven by continued investments in non-dispatchable renewable power production has been one of the major trends impacting the ETRM area recently. Aleksander Sasha Cvetkovic, the Head of Logistics and Settlement at Brady PLC says, “Recently we have witnessed a significant expansion of renewable electricity generation in Europe—generation that may change intermittently, depending on the time and changing weather conditions.” Further, Libby mentions, “Energy companies have a need to facilitate flexible assets on new marketplaces.” Brady works closely with its customers in their effort to adapt to the changing needs that these trends cause.READ MORE
“We’ve modularized our portfolio, streamlined our delivery processes and can leverage cross-commodity synergies to achieve scalable and cost-effective offerings that address the needs of customers,” Libby mentions. “One example of this is how we are extending Brady’s integration framework to simplify the connection and reconciliation of deal data between ETRM and position management systems. This allows customers to build short-term trading solutions, which can operate efficiently and with high availability, even when they are disconnected from upstream systems,” states Libby.
Further, low and yet highly volatile energy prices have caused Companies to continue increasing their focus on managing operational risks and efficiency through automation. Brady, for its part, reacts to this market requirement by placing particular emphasis on the ongoing expansion of its automation capabilities. The firm’s ETRM reporting repository is updated automatically so that it can continuously provide updated portfolio, position, and transaction reporting. Libby adds, “other examples of Brady’s automation capabilities include our Automated Deal Capturing and Deal Reconciliations capabilities which offer customers FIX adapters with open access to the industry standard Financial Information eXchange protocol.”
Brady offers its software solutions as flexible modules, which can act as either standalone point solutions or can be combined together into a broader and comprehensive product offering. This ensures customers can tailor the system capabilities that they want without investing in tools they may never use. On the top of their agenda is security; Brady makes sure its solutions are compliant with new and evolving regulatory directives such as GDPR and MiFID II. They provide additional record-keeping and reporting facilities for maintaining order books and improving liquidity and a convergence of traded products and prices.
Assisting Vertically Integrated Energy Trading
Brady’s ETRM solution provides a central trade repository covering both, plain vanilla and sophisticated instrument classes. The internal Curve Server function includes live market price adapters for vendors in real time and smooth arbitrage free-forward curves with a profiling granularity all the way down to 15 minutes resolution. Control over the positions is obtained with portfolio reporting, P/L reports, and risk management engines, which allow the user to run standard risk measures such as Exposure, Currency Exposure, Parametric VaR, Monte Carlo VaR, CFaR, and PaR.
On the asset management side, Brady provides contract management functionalities, enabling users to aggregate measurements from SCADA and calculate the settlement from complex tolling agreements and modules, which simplify the dispatching of power plants by grid operators. On the trading side, the time-series forecast and realized volumes are managed in the Physical Energy Data Management module. This specialized system allows powerful formula-based time-series management on large data volumes in an efficient and reliable manner. The module also manages the sub-balance groups, generation portfolios, and the aggregation and settlement of portfolios.
Brady’s logistics solution plugs into both physical portfolio management and the ETRM systems allowing real-time position monitoring, trading support, and communications to short-term marketplaces and grid operators. Libby adds, “In addition, counterparty risk is handled in a dedicated Credit Risk module that receives exposures per counterparty from the ETRM, including downloaded credit ratings from rating firms so users can assess and report the credit default probabilities, expected shortfall, and potential future exposure.” The firm also covers end-user sales by offering a solution for quick price offer calculations linked to live market prices from the Curve Server.
Evolving with the ETRM Market
Over the years, Brady has delivered best-in-breed solutions for the ETRM space and is poised to march ahead in the same fashion when it comes to responding to its clients’ needs. Libby mentions, “Recently, CIOs are facing an increasingly large volume of market changes that require customers to change, improve, and modify their operational trading processes. As such, Brady has taken an active approach to support customers in making these transitions by ensuring we address new market change processes as part of our standard product offering.” As part of its developments for the I-SEM market, the firm updated its exchange integrations to the latest versions of the exchange APIs.
Another challenge for CIOs, according to Libby has been an increased focus on IT security and compliance, especially after recent malware spreads and new privacy regulation updates. To that end, Brady provides standard tools and services to help its customers to identify and manage personal information and GDPR compliance. The company also leverages the latest middleware, operating systems, and libraries in its software development and standard maintenance work to minimize the risk of exposure. “This makes it easy for Brady’s customers who have on-premise solutions to achieve compliance with their infrastructure,” informs Libby.
Brady has also assembled a team of machine learning and big data experts to support its customers in managing large data sets in cloud-based processing environments. “We can now offer customers both the technical competence and organizational and procedural advice about how to make the most out of their data. This team also allows us to fast-track our plans for the delivery of new, modular predictive analysis and forecasting capabilities,” states Libby.
Further, to deliver on the integration and interoperability needs of CIOs, Brady considers iPaaS readiness and standard integration APIs as priorities while developing new interfaces, integrations, and software services. Brady’s development teams leverage a standard framework and toolkit which allows them to integrate data stores cost effectively.
Toward a Customer-Centric Future
Cvetkovic informs, “Renewable energy sources increase the need for short-term intraday trading, and therefore a method of efficiently calculating and presenting energy balances is key. It is also beneficial to reduce the number of different systems involved, thereby decreasing complexity and operational risk. Therefore, in order to cope with increased cross-border trading the software industry will need to implement new, particularly innovative, integrated, out-of-the-box solutions that support trading across multiple borders in multiple standards, and offer a common workflow process across different market structures and present the required information to the operator near-to-real-time.
Witnessing the opportunities that exist in the markets outside Europe, Brady’s goal is aligned in one direction: “world domination.” The company is expanding its market reach in the current markets and aims to make its presence resonate in Asia, the U.S., and Eastern Europe.
Through significant investments allocated for modernizing its technology stack, Brady is updating its UI, adding new systems and modules, enhancing integration capabilities and moving to a more modular component-based design approach that will allow the firm to tailor its offering according to the needs of its users. “Being customer focused, we strive to create long and lasting trusted customer relationships. We have always been a vendor, who is easy to talk to, where it is simple to get hold of market insights in an informal manner and where long-term customer relationships count more than the next license deal,” informs Libby, pointing toward a customer-centric future.
Following a root and branch overhaul, the company is setting its sights firmly on a SaaS business model as it reconnects with its technology pedigree.
That root and branch overhaul saw the US recycling business sold to leave the focus on power trading software including an off-the-shelf energy trading and risk management solution.
This is used by some of Europe’s largest energy companies to automate logistical tasks and trade commodities across markets.
In short, they help the companies that keep the lights on…keep the lights on.
Transition to SaaS model
Following the recycling sale, the company has proceeded rapidly to a software-as-a-service (SaaS) model, with the focus squarely on its commodities trading technology services.
At the time, Brady’s executive chairman Ian Jenks said: “The sale of our US recycling business means Brady will now have approximately £8mln in cash on the balance sheet.”
And it seems that cash is being put to good use.
In an AGM statement at the end of May, Jenks said the group had struck a deal with NoRWEgian utility company Ustekveikja Energi to support its physical power output in the Nordic region.
Brady is also retaining some of its existing clientele through the transition, as the trading arm of German energy giant RWE renewed its license to use Brady’s Credit Risk software last November for a further 5 years.
Jenks also says that an uptick in commodity prices is giving the company an added boost to its fortunes.
“Overall commodity prices have risen in the last 18 months, and that generally means there’s more cash about and people are more willing to spend…that’s good for us and we’re definitely seeing an uptick in activity,” Jenks said in March.
“The restructuring is behind us, but the transformation starts this year” says Jenks, adding that 2018 is all about transforming the business and refocusing on customers to maintain its SaaS model.
“Brady has a long and proud history of being a technology innovator…you’ll start to see a lot more product innovations” Jenks told Proactive.
One of the latest products to come out of the company is its FAST START implementation offering, announced in May, which serves as a preconfigured cloud-based solution for the metals trading lifecycle, allowing clients to trade immediately.
In terms of the motivation behind the restructuring, it’s all about scalability.
“We have recruited new people, considerably streamlined the organisation and we are now seeing the results of this…as we continue to move towards our goal of being a high quality, scalable software business” said Jenks.
At 66p, compared to 55p in February, Brady is valued at £54mln.
Executive chairman Ian Jenks said the trading and risk management software provider had seen trading in-line with management expectations.
In a statement to be read at the annual general meeting, Jenks said the AIM-listed trading and risk management software provider had seen trading in-line with management expectations and had continued to invest in core technology.
Jenks also highlighted a deal struck in March with Norwegian utility company Ustekveikja Energi AS for Brady to support its physical power market in the Nordic region.
He added that the company had also launched its new FAST START implementation offering for metals trading lifecycle management in May, a preconfigured cloud-based solution which enables clients to trade immediately.
Jenks said: “We have recruited new people, considerably streamlined the organisation and we are now seeing the results of this across the business as we continue to move towards our goal of being a high quality, scalable software business.”
In March, Jenks said that: “The period of consolidation and re-structuring is complete; in 2018 we expect to resume progress in both sales and profitability and look to the future of the group with confidence.”
Brady plc was featured and listed in this year’s Cyber Risk directory and magazine.