Energy technology firm of the year: CubeLogic

Energy Risk Awards 2022: Software firm expands data and analytics products providing faster speeds and more technologies

Lee Campbell

The past 12 months have been tumultuous for energy markets, with volatility soaring in the last quarter of 2021 and the first quarter of 2022. These conditions make it crucial for firms to see their positions and risk exposures in real time and holistically across the organisation, to enable informed and timely decisions.

Technology firm CubeLogic, winner of Energy Risk’s 2022 Energy technology firm of the year, specialises in the enterprise risk software that makes these insights possible. It offers cutting-edge dashboard and analytics platforms on top of engines that can carry out computationally complex calculations around credit, market and compliance risk. Throughout 2021, the firm made some key developments to its suite of enterprise risk offerings, extending the data sources on offer and deploying more high-performance technologies.

“The firm now deploys several autoscaling and big data technologies, such as SignalR, Kafka, Dapr, Docker, Redis Cache, Kubernetes and KEDA,” says David Baker, chief technology officer. “This enables complex, enterprise-wide calculations to be made at top speed.”

The firm increased clients’ access to external data sets for counterparty credit, with sources now including S&P Global, Moody’s, Creditsafe and Dun & Bradstreet. It also enabled users to use their own data more effectively, improving data capture for trades, orders and market prices. It now runs across 17 energy and commodity exchanges and broker platforms including the Intercontinental Exchange, CME Group, Epex Spot and Trayport.

Capturing this data more efficiently also allows firms to improve trade surveillance and monitoring.

CubeLogic remains the only vendor to be certified by Epex Spot market for its trade surveillance product. The application is able to deal with physical commodity instruments, cascading delivery periods and market coupling zones.

“This allows effective and complete monitoring of all physical and financial trading activities for market abuses on the intraday power and gas markets,” says Ian Sloggett, sales director.

The product also uses artificial intelligence and machine learning to auto calibrate pricing thresholds to account for extreme market price volatility.

Throughout 2021, CubeLogic released multiple software as a service (SaaS) applications under a single, cloud-based platform.

“This uses an open model architecture where clients choose between in-house quantitative pricing models, CubeLogic linear models or third-party models from firms such as Numerix – or a hybrid of each,” says Karl Sees, global head of product strategy and marketing. Clients can measure, monitor, mitigate and report on multiple risk categories including position and profit & loss management, trade valuations, value-at-risk, potential future exposure (PFE), stress-testing and sensitivity analysis.

A big challenge CubeLogic addressed last year was the speed of PFE simulations. These tend to be computationally intensive, taking a long time to perform over a large portfolio of counterparties and complex trading portfolios.

To optimise our simulation procedure, we consume all computational power available to the environment to multi-process each simulation job independently. This, alongside compiling sections of the code at run time, allowed us to achieve a 100x performance improvement which gives business insight in a timely fashion for trading decision-making.

Another challenge the firm addressed was synchronisation problems that were occurring due to high volumes of data going into its real-time VAR engine. “To resolve this, we had to pass data instance records into the queue along with the message to keep track of data packets as they flow through the engine,” says Baker. “This ensured data integrity was not compromised by the parallel processing of ordered messages.”

CubeLogic’s ability to provide software that addresses some of the biggest challenges facing commodities firms and to overcome some deep-rooted IT obstacles, is paying off for the business. Group revenue increased by 44% in 2021, following a 48% rise the year before.

In the coming months, CubeLogic will launch its ‘Risk as a Service’ option for commodity trading start-ups and high growth organisations. It is deployed in a multi-tenant SaaS environment and is a scalable product for calculating VAR and handling common price data challenges. “It requires minimal IT effort to set up and manage, and it can be switched on within weeks,” says chief executive Lee Campbell. “The total cost of ownership is considerably lower than the traditional risk analytics providers in the market today,” he adds.