Hedge funds rely on Number 1 for energy risk management

RISK MANAGEMENT | SELF-BUILD PROJECTS PREVAIL FOR SMALLER PLAYERS

LONDON -- Hedge funds have been grappling with the thorny issue of modelling energy volatility with varying degrees of success since the demise of Enron in December 2001. Its collapse, together with the exit of other merchant energy companies, left the US energy market fragmented and with decreased liquidity, effectively offering opportunities for sophisticated hedge funds keen on exploiting the status quo.

Traditionally, the merchant energy trading space has been well looked after in terms

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