Aviv Handler has been instrumental to the ETOT content landscape for almost its whole history – as anyone in the business will you, he knows his stuff!
Did you know however that he’s a former programmer?
We don’t often see “IT” make the jump to commercial leadership simply due to the fact that the IT world is so vastly complex in itself.
Nonetheless, ahed of his appreance and talk at ETOT this October, we had a brief chat about his views on current times as well as his own background.
The energy trading sector has been undergoing deep changes in the past few years, with the rise of renewable energy offers, and the heavy regulatory requirements. In your opinion, what has been the main impact of these changes on the markets? On your day to day work?
My job is mainly around regulation – overall, a few things have changed in the market.
One thing is that we are moving more and more to short term trading because of renewables. Another change is the changes in prices and margins – in terms of the oil price, gas prices going down, increased LNG and that sort of thing.
So we do see decreased margins with a move to short term and perhaps more volatile trading and of course the encroachment of regulation.
The regulation has gone “up and up” and that has impacted the market as well.
What I’m seeing is a gradual acceptance of the fact that regulation is a constant part of the business much like banks and it’s taken us several years for that to happen. We are now seeing an increased focus on anti-abuse measures which we have been waiting for, for quite some time.
The move to short term trading changes the systems you might need – what strategy you adopt, how you handle risk and even how you fund yourself.
…prices have gone down and costs have gone up due to regulation. So are people trying to get higher volumes? Yes some. I don’t think people have accepted yet that low margins are here to stay.
Are people moving away from higher margins and towards larger market share?
Yes, the margins have gone down for several reasons – prices have gone down and costs have gone up due to regulation. So are people trying to get higher volumes? Yes some. I don’t think people have accepted yet that low margins are here to stay. They are also trying to streamline/automate their businesses to adapt to this.
Could you give us an example of how exactly you help market participants? Especially regarding regulation?
I help all sorts of people but a big project which ended recently was the reporting of data under the REMIT rules. I’ve helped several market participants to prepare their systems and processes for REMIT. This involves helping them work out what to report, how to report, how to interpret a bunch of long term contracts, how to put things into place and things of this nature.
Another example is Market Abuse Regulation – so I am in the process of helping many companies prepare for these regulations and that is in 3 streams. One is to make sure they have the correct policies in place; one is to make sure that they have the correct monitoring in place and one is to make sure that they are trained.
What’s your background Aviv?
I started as an “IT” guy. My original work, my degree was in IT. I was a programmer and generally in IT. I’ve not always done regulation, I’ve come in and out of it – but quite early in my career (about 20 years ago) I became the lead programmer in a project to build a regulation module for a large software company for what we called the Capital Adequacy Directive in 1995. That was my first brush with regulation then through various mechanisms I started to not only become involved in the IT side but I started to “read the rules”. And so I started to take on more of a business function as well – and that’s how I originally got involved in regulation.
My other big area is credit risk – risk management and also some general trading.
I also fell into areas more on the derivatives side of things so I used to be on the financial side and derivatives and then moved into energy in 2001.
"I think it’s important for some of the Back Office people to be IT people at first and also for the IT people to do stints among the IT people."
As someone who has had a great deal of exposure to the Back Office and IT side, what do you think makes a successful recipe for optimal communication?
I think that co-mingling is usually the way.
I think it’s important for some of the Back Office people to be IT people at first and also for the IT people to do stints among the IT people.
What do you think?
Have you also observed the move to more short term trading?
What about the move away from margin-focused trade to market share-focused trade?
Let us know!
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