The Value of FTR Market Competitive Intelligence
by Stephanie Staska on May 30, 2023
Are you looking for data on Financial Transmission Right (FTR) market participation, and aren’t sure where to find it?
FTR transactions are a complex market instrument with enormous volumes of associated data, and as such, have unique challenges with doing market analysis. This post explores these challenges, and how Yes Energy® can help you Win the Day Ahead™ with better data delivery.
Why Would You Want to Analyze FTR Market Data?
FTR trades and prices are public data. This means that anyone can access this data and use it for competitive intelligence analysis purposes. Some of the questions that the market is asking are:
- How are my competitors performing?
- This allows you to see the outcome of others’ trading strategies and if you’ve missed opportunities in the market that your competitors have captured
- You can identify if your pre-trade analysis is robust enough and needs updates
- How is trade volume changing across the markets and competitors?
- Seeing how trade volume is changing in the markets enables you to see where market peers are investing in FTR positions, and if any patterns should inform your decisions
- Which companies have the top FTR traders?
- Knowing which traders are performing best can highlight which traders are the top targets in the industry
- This is valuable for current employers to focus on retention, as well as or competitors that wish to recruit them
- How does my risk usage compare to others in the market?
- Knowing who has the best return on risk, and value at risk (VaR) per MWh is valuable to help inform on trader and company performance across the market
- What is the credit risk of FTR market participant’s open positions?
- After the Greenhat default this is a concern of market participants and regulators alike
Data Management is Challenging
In order to support analyzing FTR market participation information there is a fair amount of data management your company needs to support. This includes:
- Large dataset
- There is an immense volume of data, especially if you are looking to analyze trades across multiple ISOs. The volume of data makes data management and storage both difficult and costly.
- Trade and Price Capture
- Unlike exchange-traded futures and options, there isn’t a single source of truth for these trades. In the US wholesale power markets, there are seven ISOs that provide FTR transactions, with seven different interfaces and file types.
- You also need a plan for how to convert multi-month periods to monthly buckets to effectively value P&L and risk on FTR contracts.
- Model Remappings
- ISO markets often remap one node to another. These occur in cases where a node is de-energized, for example. That means the market may have an FTR contract with a source or sink node that is no longer traded or priced. Making sure that you can map these to the new node definition is critical to ensure accurate P&L and risk values.
- ISO Changes
- The ISOs can change technology requirements. Some recent examples of this were MISO MUI 2.0 and PJM’s digital certificate requirement. If you have internal processes built to communicate with the ISOs to capture trades and prices, you need to make updates to ensure your processes are not interrupted.
- The ISOs can also make more foundational changes that impact your ability to capture trades, capture prices, do P&L and risk calculations. A recent example of this was the new PJM Peak Types that were added in 2022. Challenges included: how to calculate P&L and risk on old peak types after they were retired and how to calculate P&L and risk on new peak types as they were introduced.
At Yes Energy, we offer engineered, model-ready data with the strongest real-time and current market day data available. We even have a team dedicated to proactively monitoring each market for new datasets or data changes that will impact you, so if an ISO changes report formats or fails to report data, you’ll know.
Yes Energy Can Help!
Yes Energy’s FTR Positions Dataset solution provides FTR trading organizations and regulators with unprecedented visibility into FTR market positions. Historically, only FTR trading organizations with large IT budgets have been able to build systems to gain visibility into the positions, performance and risk of their competitors in the market. With FTR Positions Dataset, you can outsource this expensive data management, including trade capture, model remappings and ISO changes.
The following capabilities are available in FTR Positions Dataset:
- Coverage of all positions in US FTR markets
- Industry-standard methodology for marking and settling FTR positions, providing contract level closed (realized) and open (Mark-to-Market (MtM)) P&L data
- Standardized risk metrics available to compare risk usage across markets and participants
All of this is delivered on the powerful Snowflake cloud platform (Snowflake is a data warehouse available across multiple cloud regions). This allows you to answer the above questions in seconds, compared to a more manual process that may take hours or even days for your organization today. You can also further integrate this data with Yes Energy’s DataSignals Cloud datasets, internal data and other third-party data available on Snowflake, fueling powerful big data analysis. Applying Yes Energy’s purpose-built tools in these ways allows you to understand market patterns and develop the best strategy for you and your organization.
At Yes Energy, we understand the complexity and unique challenges of nodal power markets. It’s why we’re committed to delivering superior data how and when you want it.
With billions of data points to navigate and million-dollar decisions to be made, having Yes Energy as your liaison into the power market frees up your time for what matters most. Learn how we can help you Win the Day Ahead™ here.