ComTech Advisory: FIS Energy & Commodities is just a part of a larger group of products and business units offering trading and risk products that have some commodity capabilities. Can you tell us more about the products FIS has to offer into commodities?
Dr Markus Seiser: Recently, we have combined all Trading and Risk Management assets in one joint group called CATR – Cross Asset Trading & Risk – covering the whole ecosystem from financial markets to energy & commodity markets.
Companies of various industries approach the energy & commodity arena for different reasons –we support producers/generators, utilities and asset backed traders as well as banks, hedge funds, merchant traders or corporates in this area. The differentiator or the ideal product is very much dependent on the requirements the customer wants to solve. Let me give a brief overview:
- If we look at banks, hedge funds or merchant traders – where energy & commodities are just an additional desk to their financial portfolios of equity, fixed income, money market, etc. – then FIS’ Front Arena is the ideal product for them – as it provides scale, real time risk and lower total cost of ownership.
- Asset backed traders and utilities typically use – depending on their size – either FIS’ Aligne or FIS’ XDM as they require front-to-back trading support, but also additional functions like time series management, forecasting, optimization and/or scheduling/logistics to cover the physical side of the business.
- Corporates typically enter the field of commodities from a hedging or treasury perspective – in most cases they don’t even consider themselves as traders – just managing the commodity exposure to ensure margins; depending on where the come from those clients are ideal candidates for FIS’ Kiodex or FIS. Quantum or a combination of both.
- Lastly, we see a bigger demand for risk overlays – when a company wants to manage risk on top of a distribution system or at enterprise level. The FIS flagship product for real-time market and credit risk incl. all types of XVA calculations is our FIS Adaptiv platform, which can also be embedded in the other transaction pipe systems.
ComTech Advisory: Are there any plans to better leverage these products and be more focused on the commodity markets across FIS?
Dr Markus Seiser: Yes – we are looking into three main areas here:
- Sharing of intellectual property – especially in the areas of risk, models, market data, forward curves and market connectivity.
- Expanding the footprint in our current client base and augmenting the footprint with additional products and services – as FIS has all the offerings to be the one-stop-shop for our clients;
- Lastly, harmonizing and increasing our go-to-market. In the past, we have mainly marketed our product FIS Aligne and to some extend our XDM and Kiodex solutions. Going forward we will also go-to-market with FIS’ Front Arena and FIS Adaptiv because each of them have a double-digit number of clients in the space already and increase the overall offering.
ComTech Advisory: What market trends are you seeing that might be targeted by a portfolio of FIS Trading and Risk Management (TRM) products?
Dr Markus Seiser: There are several trends we are following and they vary for the different geographies and products – on a high-level:
- Platform consolidation, lower total cost of ownership and migration to the cloud
- Short-Term and continuous trading including algorithms for programmatic trading applying machine learning and artificial intelligence
- Retail and trading coming closer together in some markets with the requirements of providing offer management, transfer pricing, web-portals etc.
- Holistic risk view on market risk, credits risk and XVA calculations in real-time
ComTech Advisory: What about the trading-Treasury area? Do you see potential there?
Dr Markus Seiser: We do have a lot of Energy & Commodity clients using our FIS Quantum platform, which is one of the leaders in the space. There is potential and there is also a dependency on the organizational set-up of the firms itself – e.g., for traders and utilities, treasury is very distinct from trading – whereas in big corporates the treasury department quite often manages the commodity exposure as well.
ComTech Advisory: FIS’ Kiodex has been around quite a long time now, how is it doing as a product and what is its target market these days?
Dr Markus Seiser: FIS’ Kiodex is a very solid and reliable contributor of revenue and profit in our portfolio and so a well-regarded asset. Kiodex is used for real-time position, valuation, profit-and-loss, and risk. It also has a real-time limit system monitoring positions, exposures, etc. Additionally, Kiodex Market Data provide independently-produced commodity prices and volatilities. It is a true SaaS application and can be set-up and running in a couple of weeks.
Main target segments are corporate hedgers – especially airlines, food companies, regional banks, hedge funds and commodity trading houses. Recently, we added several well-renown firms in the food and beverage space and we expect this trend to continue.
ComTech Advisory: Do you have any other cloud-native products and if not, what are your longer-term plans in that area?
Dr Markus Seiser: Yes, we do – this is a big topic for us, as it is for all vendors. Public cloud is one of the biggest disruptors in technology in the last couple of years. The ultimate destination for FIS is to become “cloud native”, meaning having the ability to deploy and deliver FIS services anywhere in the cloud be it private cloud, hybrid cloud, federated clouds, customer clouds or public cloud. To do so we will take advantage of cloud computing frameworks where applications are designed to be decoupled from any specific physical resources.
We already have tools which are multi-tenant and SaaS deployed in the cloud – like our Kiodex solution. Currently, we are making proof-of-concepts with AWS and are working closely with Microsoft Azure and others to optimize our journey to the cloud.
For example, the first cloud native version of our short-term-trading application will be launched this summer. We are very excited about that – and I am sure our clients will be, too.
About Dr. Markus Seiser Chief Operating Officer, Energy, Global Financial Services, FIS
Dr. Markus Seiser is chief operating officer for the energy business in our Global Financial Services business at FIS. Based in Vienna, Markus is responsible for helping clients streamline and digitalize their trading and operations in the energy and commodities markets.
Markus previously worked for Landis&Gyr, a large Swiss company that is now owned by Siemens, in the area of network management and optimization as a project engineer and project manager. He was founder and later CEO of European energy solution provider IRM (Integriertes Ressourcen Management), where he was responsible for establishing the product and project management teams, focusing on physical trade and risk management; defining the product strategy; and developing the IRM trading software. In 2007, IRM was acquired by OpenLink, and Markus became managing director of OpenLink’s EMEA region in addition to his ongoing responsibilities as CEO of the IRM subsidiary.
Markus majored in electrical engineering at the Graz University of Technology in Graz, Austria and holds a Ph.D. from the Technical University in Vienna as well as two post-graduate degrees in economics and social science.