We are happy to share details about the recent Discuss.See.Network (DSN)- event that took place in Aarhus, Denmark. The keynote speaker was Bartosz Rodzos, Head of Trading Back Office at Ørsted. Bartosz provided a candid look behind the curtain of Ørsted's journey of transitioning back-office trading operations.
Ørsted is the largest power producer in Denmark, with market shares of 49% for electricity production and 35% for heat production. With a 16% market share, Ørsted is the world's biggest offshore wind farm company. In Ørsted's continuing effort to optimize and improve efficiency, Ørsted identified several opportunities to improve the OTC settlement process between trading partners. Last year the back office registered over 4 million confirmed trades, including OTC and Exchange, but reconciliation was often cumbersome and required frequent manual intervention. This resulted in operational risks, long settlement cycles, increased credit risk, and limited flexibility in liquidity management.
Instead of making incremental changes resulting in limited advantage, the Ørsted team addressed the underlying symptoms and updated the entire process. With the root causes of the inefficiencies identified, the team concluded that leveraging the EFET standards approach works best. Bartosz Rodzos emphasized the value of the rapid market adoption of electronic Settlement Matching (eSM), which brings benefits to Ørsted and all its counterparties. As he commented, "Everyone is considering eSM Standard Implementation!" Another point Bartosz emphasized was the importance of technology selection in transitioning trading operations. According to him, evaluating the ease of onboarding, a vendor's commitment to eSM, and their long-term vision are all crucial factors. He added that it's essential to ensure that the technology represents today's best practices rather than recycling legacy technology. Bartosz Rodzos' presentation highlighted the growing importance of automation and compliance in eCM, eSM, and regulatory reporting, which was quite interesting to learn about.
Another key take away from this event was the impact of macroeconomic changes on companies and their back office. There is pressure on many businesses to reduce costs, improve transparency, and comply with regulatory requirements. As macroeconomic changes continue to impact the industry, companies must stay ahead of the curve by implementing best practices and solutions that improve efficiency, reduce risk, and enhance liquidity management. The back office responds to these challenges by focusing on automation and compliance.
In conclusion, the presentation & the roundtable highlighted the key trends shaping the back office in 2023. The continued push towards automation and compliance, the impact of macroeconomic changes, the need to improve the customer experience, and the changing workforce requirements will shape the industry in the coming years. It’s clear that companies like Ørsted are leading the way in implementing new solutions and technologies to address these challenges.
We had a great time socializing over a couple of glasses of wine and some 'non-competitive' games of Pétanque, despite the uneven terrain conditions, overthinking of techniques, and possible over-fluid hydration levels. Nonetheless, many thanks to all who attended and participated. We and Previse Systems look forward to the next DSN-event! Click here if you want to sign-up for the next event on the 19th of October 2023.