Providing flexibility and reducing credit exposure through storage futures contracts.
Launched in collaboration with LOOP and CME, the world’s first crude oil storage futures contract has made it easier to acquire storage on a short to intermediate term basis. This mitigates counterparty risk through clearing house guarantee and, at the same time, reduces credit exposure found in term contracts.
Post-auction, these contracts can be traded on CME or in the bilateral market, increasing a company’s flexibility around trading decisions.
The value of a storage futures contract has a direct correlation to a Calendar Spread Option (CSO), due to the inherent optionality embedded in both. With a better understanding of this dynamic, trading companies can develop more sophisticated approaches in making both their derivative and physical trading decisions.
“You have liquidity, transparency, ease of use, and credit mitigation. All of those factors have never existed before. That truly is the key to our innovation.” Bo Collins – Founder, Matrix Global