May 29, 2008

The increased volatility in the global commodities markets will lead to greater spending on risk management IT, according to Datamonitor.

The London-based market analyst says demand for oil and raw materials in rapidly developing areas of India and China is offsetting the downturn in the U.S. economy and spurring the growth of commodities trading volumes and prices. Further, the upheaval in equity markets and the credit crisis is positively influencing the stream of investment in commodities, as investors are lured by the promise of higher returns in the commodities market, Datamonitor contends.

But the demands of trading physical and financial commodities can be very different, and to address these demands, market entrants will require systems that facilitate compliance with a range of international and domestic regulations, and support an enterprise-level approach to risk management and business intelligence, Datamonitor reports. The firms adds that systems should enable the entire trading chain, from deal capture to risk management to settlement and accounting.

"A new look at trading platforms and risk management solutions, as well as protocols, is under way," said Damian Shaw-Williams, senior financial services technology analyst for Datamonitor and author of the report, in a release. "There remain great opportunities for vendors to get ahead of the curve and facilitate the development of an exciting new trading opportunity through both multiproduct applications and risk management packages for market participants."