The looming closure of the energy trading industry’s prevalent instant messaging service has created a “mess” as market participants search for a suitable replacement.
Despite the inherent uncertainty the closure creates, an ICIS survey shows two front-runners have emerged as likely replacements, which could split energy trading down the middle. While global crude and LNG traders are leaning heavily towards an instant messaging service operated by the ICE platform, European power and gas markets are favouring Eikon Messenger, a service operated by information provider Thomson Reuters.
With technology giant Yahoo set to close its instant messaging service in its current guise on 5 August, many across the energy trading sector will be forced to adopt a new communication platform to stay in touch with counterparties – and compliance issues have emerged as the key concern.
A large number of energy traders have said that a potential short-list will be defined by the extent to which platforms meet strict compliance criteria, with the ability to automatically record and archive conversations a key consideration. “Getting something that we think compliance are happy with is the biggest hurdle,” one trader at a European commodities firm said.
For this reason, a similar replacement service being developed by Yahoo is not on track to be adopted by the trading community, because among its new features is the ability to “un-send” a message – a feature that creates a grey area in terms of communication with counterparties that would not sit well with the more black-and-white world favoured by regulators.
The imminent closure of the industry’s benchmark communication tool has created an inevitable operational hiatus across the industry, with many companies waiting to see what the rest of the market does.
“Our choice but will partly be driven by what the rest of our industry decides to use,” one UK-based power and gas trader said. “It depends what everyone else does,” said another.
The ICIS survey revealed a fragmented landscape at present in terms of what traders would prefer to use, but once momentum gathers behind one or two systems, many trading companies will jump on board.
A number of companies based across Europe were also keen to hear from ICIS how the rest of the industry was leaning, so they are able to make a decision in line with the majority.
As the Yahoo decision to close messenger spread slowly across the industry, Skype for business initially emerged as a potential replacement, with a host of companies already using it internally. But the platform has since fallen by the wayside, because it has a connection to contacts held by the Outlook email service, meaning traders will not be able to take their contacts with them automatically if switching companies – a major headache for an industry where recruitment can resemble a merry-go-round.
In the running?
Other platforms that were in the running included Instant Bloomberg; popular mobile tool WhatsApp; Symphony, which was developed by and is being pushed by a number of banks; and a new entry to the market, GreenKey.
While some, such as Symphony and GreenKey, were specifically developed with traders’ compliance criteria in mind, others, such as WhatsApp, have already fallen at that hurdle.
Yahoo’s decision is all but certain to herald a break between the technology giant and the trading community, despite the potential revenue streams that being regarded as the benchmark messaging tool could keep open. However, monetising this exposure is clearly a bridge too far for a technology company that offers little else to the trading sectors specifically – hence the emergence of ICE and Eikon Messenger as front-runners, both of which are operated by firms that provide a host of other services to energy traders.
Instead, Yahoo is openly targeting its new offering at a mass-consumer audience, as opposed to a relatively small professional sector.
Yahoo chose not to respond to questions on the certain loss of its energy trading users, with chief architect Amotz Maimon saying only of the new platform: “We intend to continue our focused efforts on the new messenger, with a goal of delivering the best experience to our users.” firstname.lastname@example.org
ICIS received feedback from 58 energy trading companies on the question of what will replace Yahoo messenger. See the interactive chart for a total breakdown of responses, with filters showing global LNG/crude markets, European power and gas markets.