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Credit, Risk and Financial Disclosures
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2. ©2002 Prebon Energy, All Rights Reserved
David E. Rutter
Chief Executive Officer of Prebon Yamane’s Global Energy Group
Responsible for the day-to-day operating of Global Energy units, located in Asia, the Americas and Europe
Previously Prebon Yamane’s Managing Director of the Americas with 15+ years Financial Markets experience
Principle of the Prebon Yamane Group
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Subsidiary of Prebon Yamane Group
PYG has locations in 27 financial centers throughout the world
Brokers transactions with a value exceeding US$65 Trillion annually
$500 million in global revenues and 1,750 in staff
Prebon Energy is the largest global energy broker. Product coverage includes Power, Gas, Oil, Emissions and Coal markets
Energy centers located in New York, London, Amsterdam, Singapore, Sydney and Tokyo. Emissions in Houston and Salt Lake City
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Market Downturn
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How did we get here?
Rapidly growing markets in adolescent stage
Non-financial market participants geared towards trading
Low barriers to entry
Enron effect: Market sentiment shift
.com confusion: The rush to the billion dollar platform
Participants desire to capitalize on equity investments creates confusion and conflicts
Platforms should exist for efficiency
Lack of Industry Standards
Poor documentation and no clearing
No common credit and clearing valuation methodologies
Lack of reliable indices
The trading platform myth
In traditional financial markets, significant resources are spent on Risk Management, Capital Allocation and Credit Issues - most market players are non-traditional players
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How do we get out?
Strong Medicine: Market forces already at work
Punishing loss of market capitalization; credit downgrades, senior executive ousted
Energy Trading Companies now very focus on capital allocation, risk management and credit
Clearing Solution evolving in the next months
Energyclear, LCH, NYMEX, OM and Bank of Hanover
Market Indices emerging
Daily ICE Index
LPX
Financial Institutions becoming involved
UBS, Barclays, BOA and others
Long term outlook: Bullish
In traditional financial markets, significant resources are spent on Risk Management, Capital Allocation and Credit Issues - most market players are non-traditional players
©2002 Prebon Energy, All Rights Reserved