Corners and squeezes are the inappropriate exercise of market power in either an asset or the futures or forward contract referencing that asset.
Allegations of corners or squeezes may require analyzing the evolution and size of portfolio positions and holdings of the relevant contracts and physical commodities. We put these positions into the context of the conditions affecting the physical supply and demand of underlying assets as well as factors impacting trading and pricing of the relevant contracts across multiple electronic and exchange trading venues.
Our experience includes:
- Providing detailed structural analysis of the underlying physical market including the deliverable supply available or the ability of shorts to meet delivery obligations.
- Analyzing detailed trade and order book data from proprietary and nonproprietary systems covering multiple years and spanning multiple trading desks to recreate and investigate daily positions and exposures to movements in the underlying reference product.
- Utilizing audit trail, order book, and transaction-level data to analyze trading in derivatives and their respective underlying products.
- Assessing the impact of market participants’ trading on the underlying products.
- Assessing trading behavior in the context of intraday hedging and risk management, market making, and the execution of client orders.
Crude Oil and Associated Products
On behalf of a multinational oil and gas company, Cornerstone Research analyzed allegations that the company had cornered the market for propane. Our analysis involved evaluating physical and financial positions relative to market conditions and price movements.
Cornerstone Research has analyzed allegations of commodities market manipulation through trading activity in both futures and OTC markets, for example, CFTC Rules 180.1 and 180.2. We examined data and reports from proprietary trading systems, as well as publicly available data from the USDA, the CME, the CFTC, and other third-party sources. We also analyzed allegations of improper exercising of market power to create an artificial price.