Natalia García
Director General
eVOLT
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View from the Top

Smart Bilateral Trading Solutions for a Liquid Market

Wed, 02/21/2018 - 14:57

Q: How does eVOLT generate added value for its customers?

A: We are a service and financial derivatives provider for risk-management purposes. Our goal is to provide relevant information, a wide product and service portfolio, as well as a process that supports the needs of different energy market participants, including wholesale market participants, financial institutions and infrastructure funds. The basis of our added value lies in our consulting, market intelligence, product-structuring services and marketplace setup capacity pertaining to the most efficient and profitable way of contracting energy and mitigating both short and long-term risks. The access to our platform is designed to follow the trade lifecycle end-to-end, enabling direct participation in energy transactions and any other associated product that will be increasingly available as Mexico’s electricity market matures, without investing in a traditionally large infrastructure or costly intermediaries. By enabling direct participation, reducing the need for inhouse infrastructure, lowering fees, fostering competitive pricing, generating narrower spreads and providing process efficiency and optimization, we can greatly decrease trading costs for our clients from the get-go.

Q: How does eVOLT mitigate risks related to producing and managing energy?

A: We are developing a fully streamlined, automated and robust trade lifecycle process. From data services — information access, price discovery, benchmarks and indicative pricing — to compilations that provide our clients all the tools to make the best decision among the available options, paired with their needs and priorities. While power purchase agreements remain the preferred instruments, we cover a wide spectrum of possibilities and contract types that are not yet on our clients’ radars. Financial contracts, compared to PPAs, help mitigate risks by providing shorter contract terms and fixed PPA prices, making these physical transactions less risky. We are standardizing contracting processes under a Master Agreement through which private players can engage in physical and financial energy transactions, bypassing lengthy contract-term negotiations. We structure and standardize our products so they are ready to be traded within our platform and we tailor solutions for all wholesale energy market players, including generators, utilities, marketers and financial institutions. The company also includes post-trading services, such as settlement, netting and position monitoring, to avoid investing in a highly fragmented market and to maintain control and visibility of all its energy-trading operations in an efficient, direct and seamless way.

Q: What products and services best encapsulate eVOLT’s strengths?

A: We are primarily focusing on OTC derivatives — forwards and swaps — and customized off-venue financial derivatives, as those are the risk-management products with the highest demand. We have identified a window of opportunity to introduce precursor marketorder mechanisms to create a market-order system for transactions in infrastructure and green bonds, ETCs and physically settled derivatives with STP scheduling at CENACE. Two main systems, quotes and proposals, will be used for this particular development. Being able to provide price projections, commercialization options and product pricing for these types of projects confers cost and income certainties within a specific time frame.

Q: What are eVOLT’s expected priorities for 2018?

A: Our main priority is injecting liquidity to the market through our risk-management solutions and providing price certainty to our clients, enhancing bilateral transactions in Mexico’s young energy trading market. Price projections, reference indexes and transaction processes will be our primary tools to attain this objective. Once you can offer a standardized and user-friendly process, transactions will multiply on their own.

eVOLT specializes in OTC and off-venue financial derivatives and risk management solutions for bilateral trading operations. The company is developing a fully streamlined, automated and robust trade lifecycle process for Mexico's energy market.