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From Charles Reyl, Founder and CEO, Parity Energy
Parity Energy is a New York-based energy derivatives firm. We developed the Parity Energy Platform (PEP), an Internet-based electronic marketplace for trading in derivative financial products. Our products currently include energy options, primarily crude oil and natural gas. We also operate a brokerage arm active in energy options and swaps and have more than 100 customers, including major energy trading hedge funds, banks, energy producers and floor locals.
Parity’s target customers trade the right to buy or sell $50 billion worth of energy (or 500,000 option contracts) every day, with 98% of that volume traded by voice. Our electronic platform is designed to make this process easier and more efficient. Since its launch in January 2008, the platform has signed up 30 institutions and achieved over 70% market share in crude oil same-day options. This volume alone represents close to 10% of the entire energy option trading volume on CME’s Globex.
Our electronic platform (PEP) is superior to existing trader-to-trader systems thanks to its ability to emulate voice-based trading electronically. In contrast to broker-centric systems, PEP puts the control of trading firmly in the hands of the trader. PEP is designed with privileged in-house access to trading, brokerage, financial engineering and technology experts. PEP is a browser-based platform that traders can use anywhere without any additional software being installed on their machines.
Our revenues have grown at an average rate of 30% quarter over quarter for the last six quarters. Average daily volumes are projected to reach 5,000 contracts in 2008. We have 17 employees, and our investors include sophisticated money managers and derivatives trading experts.
Disclosure: SAI Editor Henry Blodget has provided informal advice to Parity Energy and owns some founders’ shares in the company.