Internal Market for Energy Trading


For multiple large energy traders, novitam has provided indepth analysis on current state of their order flow and trade booking (As-Is process overview). Based on the current state, a vision was developed, leading to an internal market implementation. Novitam supported the implementation by translating the vision into requirements and detailed design. These detailed designs were the basis for the vendor the develop an internal market that matched the vision stated by the energy trading company.

The overview below provides an overview of the methodology used and the products created by novitam.


The business analysis for the internal market project consisted of five major area’s:

  1. The As-Is analysis has been the basis of the decision making on portfolio’s, products and markets to be assigned to desks and offices. The As-Is analysis was done based on architectural principles and delivering clear inside in markets; products and processes on all forward trading. Including automated and manual processes regarding exchange and broker based trading and internal trading.
  2. Based on the As-Is analysis, both Stakeholder requirements (user) and Solution requirements (system) where gathered and plotted on every architectural level within the as-is analysis. Creating a clear picture where improvements on processes could be achieved; data structure and data integrity could be improved and required capability of the to be implemented solution could be made specific.
  3. The To-Be architecture was based on approved and to be realized changes in all architectural levels. And helped the new organizational structure to be implemented and become operational. It also provided all the required (high prioritized) system requirements for the vendor to build and deliver.
  4. In cooperation with the trading organization “Rules of the Game” where formulated to specify the behaviour and do’s and don’ts on the internal market such as trade types (FoK, Iceberg) or transparency (visibility of origin, volume, order routing).
  5. After delivery of the solution intensive functional testing, based on functional requirements, was provide by defining all possible scenario’s, selection of testcases and organize testing and training of traders

As-Is (Current state)

  • Delivery of as-is description (current state) on markets; products and processes (thorough analysis of the business architecture) and a high level analysis of data and systems (i.e. the IT-architecture)
  • Relations and structure between markets; products and processes (business architecture) and process specific details (e.g. manual versus automated / ad hoc versus scheduled)
  • Automation gaps meaning identification where systems functionality is missing (high level).

All descriptions captured in a Business Analysis Document containing detailed overview of markets; products and processes and relation between those architectural levels.

As-Is process diagram (example)

Stakeholder requirements

Description of the stakeholder requirements. Stakeholder requirements are a detailing of the business requirements and an essential step to formulate solution requirements as a next step.

To-Be (Future state)

  • Analysis on process optimizations
  • Analysis on process automation
  • Analysis on trading automation

Design the future state using architecture

Creating a To-Be architecture from vision and requirements

Detailed diagrams for future state

Example of To-Be diagram including requirement mapping

Solution requirements

The target architecture covers all requirements (both functional and technical) and relates the requirements to the specific layer and position.


Detailed design for Order Management

Combining the detailed diagrams with the solution requirements lead to detailed design of functionality and screen mock-ups. And example of such detailed design is provided below:

Order overview Market Access trader

The picture shows the setup of the MA screen that should be used for manual routing 

Order routing console
  • The orange box top left “Carbon” contains the instrument group the MA trader is looking at. This instrument group is selected by the MA trader. Details on how these instrument groups are setup and how traders can select those instrument groups is described in another detailed.

The MA trader can have multiple instrument groups assigned to himself. Meaning that this screen could have multiple widgets containing each a separate instrument group.

  • The button “Select” can be used to select multiple orders. This functionality can also be used in the first column of the grid: Select. Or use Crtl S.
  • The “Route” button will route the selected order(s). And will open up the screen as described in paragraph 5.2. If multiple orders are selected, the routing screen (5.2) will appear per order in sequence.
  • The “Withhold” button will allow the MA trader to withhold the selected orders from the external venues.
  • The “Claim” / “Execute” / “Fill” buttons will be added in later detailed design. 

Detailed screen for order routing

The screen below visualizes the details of the internal order (on the left side) and the details to be added by the MA trader of the right side before the order can be routed.

Order routing detail

The purpose of this screen is to provide the MA trader all the information per order to route this order with the correct details to the venue of choice.


The internal section of the screen contains all the information related to the parent order:

  • Symbol refers to the internal instrument. For Carbon the EUA Monthly December contract, for the year 22, 23 or 24.
  • Side refers to either Sell or Buy
  • Price is the limit price provided on the order.
  • Quantity is the number of contracts on the order
  • Trader refers to the originator of the order on the internal market.
  • Portfolio is the target portfolio provided on the order.
  • Label is the Prop / Hedge label of the order
  • Expiry is the expiry parameter of the internal order

All details provided in the section “Internal” are all details referring to the parent / internal order. And can not be changed by the MA trader. Therefore all the boxes are light grey, to show that this data can not be changed by the MA trader.


The External section of the screen contains information for the MA trader referring to the routing of the order:

  • Route to refers to the venue of choice. For the Carbon release MVP this venue will always be ICE. But in future releases, multiple venues can be selected here.
  • Contract refers to the contract that will be created on the external venue. This contract is also grey. Meaning that this cannot be changed by the MA trader. The combination of internal instrument (Symbol) and the venue of choice (Route to) will determine the contract traded externally.
  • Order Type the MA trader can modify the order type. For the MVP only Limit orders are allowed. And the only change to the order type allowed, is the change to an Ice-Berg order, or a Hidden quantity.
  • Off-set price refers to the possibility for the MA trader to add or subtract a premium that will be added / subtracted from to external order price. This premium will not be charged to the internal trade but will become P&L for the MA trader.
  • Quantity The volume that will be routed external. The MA can reduce the volume that he wants to route externally but cannot increase the volume of the order.

Order Management System by Trading Technology