The Matrix Auction Platform
Developed by Matrix Global, the Matrix Auction Platform (MAP) was designed to manage Matrix’s multiple commodity trading activities including oil storage trading with large partners such as CME Group.
How MAP Revolutionizes the Traditional Auction
MAP was developed to optimize the value of the facility’s storage assets through the creation of proprietary short-term physical bilateral agreements and financial derivatives products.
- Creation and management of independent auction “portals” for vetting bids and setting unique auction criteria
- Publicly verifiable history of all bid placements and the bid selection process
- Reduced carrying costs through consolidation of bid marketing, due diligence and closing process
- Real-time, online data access for all auction participants for increased transparency and efficiency
How MAP Benefits Its Participants
Provides flexibility and reduces credit exposure through storage futures contracts
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, increasing a company’s flexibility. The value of a storage futures contract has a direct correlation to a calendar spread option, 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.
Improves the adaptability demanded by refiners seeking assured supply
Refiners face a balancing act between their onsite storage, opportunities available in the supply chain and unscheduled outages.
Storage contracts offered through the Matrix program allow refiners to acquire storage on an as-needed basis. This gives refiners the flexibility to manage their inventories without the exposure of acquiring long-term storage. Since the transaction can be a futures or bilateral, there is an added layer of flexibility for the end user.
Enables alternative means to contract for storage assets
Historically contracted on a long-term basis, access to crude oil storage has previously been available primarily to large, well-capitalized customers who can physically accept and schedule large deliveries.
The Matrix model opens access to storage via short-term to intermediate-term contracts. This allows storage operators to leverage the optionality inherent in storage contracts and provides the storage operator an opportunity to capture the value of a steeper contango.
By developing a standardized storage futures product, there is a reduction of counterparty risk through the exchange clearing house guarantee. This not only minimizes credit exposure found in term contracts but also provides reduction in transactional costs.
Easily scalable, the Matrix model can also be expanded geographically, bringing value to storage operators by creating a liquid hub at their location.