Allegro: Integrated Commodity Management Platform for Risk Mitigation in the Energy Space

CIO VendorFrank Brienzi, CEO
A capital intensive commodity market demands risk management solutions that deliver visibility into portfolios containing multiple commodities, complex instruments, and currencies. To reduce uncertainty and exposure, energy and commodity companies face challenges finding an integrated solution that can capture, measure, and report in real-time across complex portfolios. In this situation, Allegro, a global provider of commodity management solutions headquartered in Dallas, Texas, enables clients to accurately monitor and report on their physical and financial transactions while simultaneously quantifying the associated risks. “We model our client’s business to ensure the most accurate representation of the risks in their portfolio,” begins Frank Brienzi, CEO of Allegro.

The firm’s risk management solution provides credit, market, and operational risk functionality in one integrated, stand-alone platform. Allegro Horizon, the company’s recently launched commodity management product, offers complete position visibility, risk management, controls, and regulatory compliance across multiple commodities for a holistic view of the business. “Horizon’s Credit product utilizes the best available counterparty data to predict future exposure based on the client’s current portfolio, contract setup, credit ratings and collateral,” says Brienzi. Allegro’s Hedge functionality reduces manual intervention and allows users to take a more proactive approach to hedge management using both historic and third party data for better decision making. The Market Connect product provides the ability to view and capture pricing information such as the necessary forward price curves and volatility matrices for formulating the most lucrative trade strategies in real time for faster speed to market results. Users have the ability to simulate trades and run stress tests against multiple scenarios.

Allegro Horizon’s position analytics provide clients comprehensive position reporting to enable the development of advanced trading and risk strategies. With the help of a proper and accurate valuation and disaggregation of complex transactions and assets, traders and risk managers can evaluate position information at multiple levels from an entire portfolio to individual trades.

Horizon’s Credit product utilizes the best available counterparty data to predict future exposure based on the client’s current portfolio, contract setup, credit ratings and collateral

“We also offer liquidity reporting, foreign currency, Value-at-Risk (VaR), intraday valuation, and other valuation diagnostics,” explains Brienzi.

Allegro Horizon also addresses the commodity trading and risk management needs of agriculture, forestry, food manufacturing and oil and gas along with large industrial energy consumers such as airlines, c-stores and transportation companies. It includes performance and scalability enhancements that operate on premise or in the cloud. "Allegro Horizon was developed in response to the ongoing price volatility, geopolitical unrest, sweeping regulatory change, and technological upheaval occurring around the world, with Horizon being the next evolution," says Brienzi.

Allegro’s solutions are powered by grid computing, to manage numerically intensive processes like near-time valuation. As physical quantities, price or volatility changes, calculations can occur automatically and new information is instantly distributed across the enterprise. The architecture of Allegro Horizon allows selection of only the products and functionalities that are needed by the client, while simplifying deployment for quick expansion into new markets.

These cutting-edge solutions were utilized by Trafigura, a global trading company for oil, petroleum products, metals, and logistics. By leveraging Allegro, the client was able to manage the natural gas business and execute comprehensive risk by accessing data across their natural gas business in a single system.

Allegro streamlines compliance with Dodd-Frank, EMIR, and FERC enabling the extraction and compilation of data required for reporting under these regulations. Functionality to ensure compliance with legislation currently entering its enforcement period such as various Canadian securities legislation and REMIT is also being added as the laws are completed.