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Cross-collaboration between different departments in the same company is hard enough, let alone the prospect of doing the same but across different companies.
And yet, in order for a standardisation movement such as that required for the phenomenon of electronic settlement matching -- this is precisely what you need.
As someone with 4 decades under his belt in the business (37 of them at one company no less) Gavin Ferguson is greatly positioned to comment on the state of eSM in European energy trading -- especially given his new role at EFET.
Ahead of his participation at ETOT this year, we got the chance to ask him a few questions on his career, eSM, cross-company collaboration and more.
What's it like working at EFET after almost 4 decades at Centrica?
Well, of course I really enjoyed my time at Centrica, and I worked alongside with EFET for about 15 years. It’s a real pleasure for me to be working on behalf of EFET, it keeps me involved with the industry I enjoy so much.
How long were you at Centrica and at EFET for?
Centrica 37 years and EFET 2 years. For EFET I look after standardisation, so looking to help energy companies optimise trading processes through standardisation.
What was your role at Centrica?
I managed the Back Office. In order to do that I needed process efficiencies and I could only achieve some major ones if other companies worked in a similar way electronically. EFET became the hub, helping to get all companies together so that we could work efficiently, eCM (electronic confirmations) was an early example of that.
EFET holds a special place when it comes to arbitration within the European energy trading sector, how difficult is it to bring people together and agree on standards? What kinds of problems tend to arise?
It isn’t difficult to get people to come together to agree on standards if the need is great enough and what we have found is that as volumes and numbers of trades grow, so the need for standardisation and optimisation between companies grows to the point that suddenly everybody wants it. In the past we undertook trade confirmations and right now is settlement is the hot topic.
Is there any resolution?
Yes, so the settlement standard was published earlier this year by EFET. We published and there are some companies that are now active in working towards its implementation.
Is it an automated system?
Yes, it is. For instance, you and I have done a trade; I’m going to bill you and I’ll send my version of the invoice electronically. But what you will do is you’ll send your version of what you’re expecting electronically. Now let’s say you have 5,000 invoices in the month which some companies do have.
You will send 5,000 and the counter parties will send 5,000. The systems match all the data and highlights those where mismatches occur. You just have to look at the 2 or 3 where there are miss matches and deal with those.
So, you don’t have to look for the needle in the haystack; you just are shown the needle.
How long has that system been running for?
Well, we first implemented electronic confirms in about 2004. Other services have since been added and EFET has now produced the standards for settlement.
Regarding eSM, how long before the majority of market participants are making use of it What's blocking the way?
It’s very new as the standards came out earlier this year electronic settlement matching (esm). The service providers are having to build the software for it, that is going on now and once that’s complete trading companies can use it.
In your own opinion, do you believe eSM will be working efficiently. If so, how long do you believe it will take for companies to adopt esm?
I think that eSM will lead to a significantly more efficient settlement process. I expect we’re going to see companies live late this year.
What do you think is the problem? Do you believe people are worried to use it?
No, it’s not that at all, it’s just a matter of getting the software written, tested and live.
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