About Matrix Markets
Using significant experience in the energy derivative and physical markets to create new contracts and ways to transact.
The Matrix Model at LOOP
Founded in 2014, Matrix Market’s first initiative was the highly successful launch of the world’s first futures contract on crude oil storage capacity, developed jointly by the management of Matrix, the Chicago Mercantile Exchange (CME), and the Louisiana Offshore Oil Port LLC (LOOP), the largest privately held crude storage facility in the U.S.
The Matrix model at LOOP 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.
Through the introduction of a once-a-month auction, using Matrix’s proprietary auction platform, industry clients have increased utilization of the 7.2 million barrels of storage capacity LOOP has committed to the CME/Matrix program.
The program has been successful on many fronts by:
- Ease of access
- More transparency to price
- Significantly less credit exposure
- Ability to tailor storage requirements to physical need
Traders have been as aggressive in their bidding as the international majors and refiners. Traditional storage customers have readily adopted the electronic storage auction program and are active participants.
Equally important to the creation of the storage futures concept is the reintroduction of a physically deliverable Gulf Coast medium sour crude contract (LOOP Sour). While the highly successful WTI provides adequate flat price risk protection, refiners and many U.S. and international producers face significant basis risk.
Industry Achievements and Market Benefits
The Matrix auction platform gives immediate price discovery to the value of storage
Through the CME clearing process, counterparty risk is removed between the lessee and the lessor
By removing credit barriers and improving the ease of acquisition, the Matrix model significantly increases the number of participants
Being able to acquire storage on an as-needed basis provides users the ability to match their acquisition with their financial or physical requirements
The Matrix model at LOOP has been operating since 2015, and is presently ranked in the top 10 CME crude oil contracts, as measured by open interest. This unparalleled success brings transparency to a historically opaque market and has all the potential to become an industry standard for such transactions. Matrix looks to expand on this success by creating other derivative instruments that will provide comparable benefits to the market.