Commodities, Derivatives and Structured Products

Commodities - Part 4



This eCourse consists of three modules. Module 1 focuses on both the electricity industry as a whole, and its major trading characteristics.

Module 2 outlines the key features of the coal industry and markets. Coal produces almost 30% of the world’s primary energy and accounts for over 40% of global electricity production according to estimates by the International Energy Agency (IEA). It is abundant and cheap - but generates high levels of pollution. Although the appetite for coal has declined in most Western nations, overall demand remains strong due to high levels of economic growth elsewhere (particularly in China). There are multiple sources of supply of, and demand for, coal. There are also many marketplaces and various trading and risk management instruments.

Module 3 looks at how gas has become particularly important in electricity generation where it has almost completely displaced oil as a primary energy source. The market for gas is more complex than the market for other commodities. This module examines how producers cannot quickly “arbitrage” price differentials because of basis risk, and how demand varies according to localized factors such as the weather. Finally, it describes the key features of gas trading; price formation, trading instruments, locations, players, and risk management.


On completion of this course, you will be able to:
- Define what electricity is
- List the major consumers in the electricity market
- Identify the structure of the electricity industry
- Describe the types energy spread, its uses and limitations
- Recognize the risks associated with trading electricity and how to manage them
- Recognize the key features of coal industry
- List the key producers and consumers in the coal market
- Describe the coal trading and its risk management
- Recognize the key features of gas production
- Identify the structure of the gas industry
- List the different consumers in the gas market
- Distinguish between physical and derivative trading
- Recognize some basic trading and hedging strategies


Module 1: Commodities - Electricity
Topic 1: Introduction
Topic 2: The Electricity Industry
Topic 3: Electricity Markets
Topic 4: Energy Spreads
Topic 5: Risk Management

Module 2: Commodities – Coal
Topic 1: What is Coal?
Topic 2: Uses of Coal
Topic 3: Market for Coal
Topic 4: Coal & The Environment
Topic 5: Coal Trading

Module 3: Commodities - Natural Gas
Topic 1: Gas Production
Topic 2: Industry Structure
Topic 3: Gas Pricing
Topic 4: Gas Trading
Topic 5: Risk Management: Markets & Strategies


Relevant Subject
Type 2 - Dealing in futures contracts
Type 5 - Advising on futures contracts
SFC:2.00, PWMA:2.00
All Member: HK$640
Non-Member: HK$960
Staff of Corporate Member: HK$640