Beacon Targets Complexities in Energy & Commodities
It had been quite some time since I had spoken with Mark Ayzenberg of Beacon and although I had tried to connect at E-World, the Beacon stand – like many others – was constantly busy. However, we finally managed a call recently to find out how and what Beacon was up to in the energy and commodities space. It seems quite a lot as Mark told me that Beacon has almost doubled its number of clients and partners in the space over the last two years and now has more than sixty, and seems set to extend that further this year as activity levels remain high. “We’re proud to announce partnerships with Trayport Joule, Trading Technologies, WebICE, and Trayport, enhancing our industry presence and capabilities in Europe,” he told me commenting on its partnering activities.
Some of the activity is originating with hedge funds who Mark says have returned to energy and commodities in some numbers recently from the cross-asset space. The focus of many of these funds in power and gas and primarily trading financially and via OTC derivatives, he told me. Beacon had done well in this segment he said. It had completed a couple of implementations recently and pointed to Beacon’s flexibility to add new products and capability to integrate with existing infrastructure as reasons for its success. “We have made significant investments in integrating into that environment with entities like Trading Technologies, WebICE and so on, as well as in building relationships with brokers and dealers in the space,” he said. In one instance, Beacon set up a US power desk in just 8-weeks, he told me. Mark pointed to Beacon being much more of an out-of-the-box solution in this space than previously.
Another area where Beacon has found traction is among asset managers, utilities, and merchants. He named several high-profile names in this space off the record to demonstrate his point. “A lot of European utilities are entering North American markets,” he said. “We have found a sweet spot here in the front and middle office around physical and financial power, FTRs, credits and so on.” Some of the smaller clients are also using Beacon for the back office but larger ones are using Beacon to solve specific functional gaps and then utilizing their existing back office solutions via integration. He sees this as an area of expansion for Beacon as well as in Europe where some utilities are opening prop. trading desks and need a solution that caters for more complex deal types. Additionally, he pointed out that many larger utilities have built their own libraries of models which, unlike some competitors, can be assimilated and utilized by Beacon. In the end, Mark sees Beacon’s ability to handle more complex deal types and contract structures as a key differentiator and suggests areas like VPP’s, PPA’s and so on are areas for focus. Finally, Beacon has restructured internally as well, he told me, and now has what he termed a ‘hyperfocus’ on energy and commodities.
