IM.platts.content Aboutplatts Mediacenter PDF Platts and Markets 0412 FINAL

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Platts and Markets

April 2012


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The Platts profile

Who we are: An energy and commodities information provider, and division of The

McGraw-Hill Companies

Where we are: In 15 major locations globally and close to major trading centers in Asia,Americas and EMEA

Our business model: Largely subscription based; small licensing and conference business

Markets: oil, natural gas, electricity, petrochemicals, coal, metals, iron ore, emissions,nuclear and shipping

Capabilities: spot physical and forward price assessments, market analysis, real-timenews, analytical databases, geospatial tools

Coverage: Real-time pricing and news coverage six days a week, 24 hours a day

Experience: In 2009, Platts celebrated its 100th year as an energy information provider

Customers: producers, end-users, governments, traders, marketers, refiners, regulators,analysts, consultants


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Platts History of Innovation and Market Transparency

A major focus for Platts over its entire history has been to use its reporting andanalytical methods to shine light onto dark markets where deals were donebilaterally between closed doors.

As early as 1923, Platts met the need for more frequent updates on fluctuating priceswith the launch of the first daily publication devoted entirely to reporting prices andmarket information.

As the spot market opened up in the early 1980s, it launched Platts Global Alert firstreal-time market information service delivered via satellite.

In 1992, Platts formally launched its Market-on-Close (MOC) methodology to bringrigor and transparency to price discovery. Platts has introduced this approach topricing in all oil markets globally, providing consistency of methodology andtransparency to the marketplace.

In 2007, in response to the ever rising speed and volatility of market activity, Plattsintroduced eWindow which enables traders to convey their intentions to buy or sellspecific commodities directly to both the marketplace and Platts editorssimultaneously.


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Platts Role in the Markets

Platts is a market information provider with a mission to enable greatertransparency and efficiency in commodity markets. As a publisher, Platts

observes and analyzes markets. Platts does not control markets, lead them or

determine market behavior.

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What we do Value to Industry, Market and Trading Customers

Facilitate

Price Discovery

Price assessments and benchmarks that capture representative market

value

High transparency of data and assessment methods that enhance

confidence among active market participants, passive price takers and all

other stakeholders

EstablishIndustry

Standards

Common product specifications, terms of trade and logistical norms evolveinto standards of accepted market behavior and hence greater market

efficiency and the emergence of useful pricing benchmarks

Provide News &

Analysis

News, commentary and supply / demand fundamentals help market

participants make better decisions


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Market on Close Methodology = Transparency

Platts assessment methodologies, guidelines and

administration of its assessment activities are designed with a

single goal in mind to ensure the integrity and transparency

of its price assessment processes.

Transparency in price discovery is paramount particularly

given the complexity and non-standardized nature of physicalmarkets.

Platts MOC methodology is fully disclosed to the public, as

are the transactions, including bids and offers, underlying

Platts oil price assessments.

This brings transparency to the opaque world of bilateral

trading in the physical oil markets on which Platts reports.


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Quality is More Important Than Quantity

The quality and representative nature of data inputs is of

greatest importance in determining a price assessment that is

representative of true market value not the quantity.

Platts has concluded after decades of experience in observing

and reporting on markets that transactional volume is not a

steady or dependable metric and, as such, Platts has chosennot to construct assessment methods that are dependent on

liquidity.

Platts price assessments are not susceptible to manipulation,

including in illiquid markets, due to the unique qualities of its

market-on-close methodology.


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Diversity is Important

The market benefits from a diversity of choice among price

assessment publishers and methodologies.

Any proposal that reduces choice or competition would not

serve the interests of the marketplace, and would reduce the

incentive to evolve and adapt methodologies to ever changing

market conditions.


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Oversight and Regulation

Platts believes the need for regulating physical oil markets

has not been subjected to the sort of rigorous and quantitative

cost benefit analysis that is normally conducted before a

complex global regulatory regime is established.

Price reporting generally works well. Platts is not aware of any

evidence that the current system is broken, or that thebenefits of reforming the system would outweigh the costs.

Platts overall track record is exceptionally strong.

Platts continues to engage in efforts to improve our

governance, controls and processes.

Platts always engages with regulators as a matter of course

and related to specific issues.


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Code of Conduct

Recognizing market interest in what the PRAs do to ensure

the integrity of our price discovery and the value of our price

assessments, Platts has collaborated with other PRAs to

create a Code of Conduct.

Code represents the optimal framework for balancing the

needs for appropriate governance, controls and processesamong PRAs with the need for editorial flexibility.

The self-regulatory model espoused by Platts and its

competitors has worked well in other markets and Platts

believes that it would work work well among PRAs.

Platts shares with IOSCO the objective of doing all we can to

inspire confidence in the work we do in support of the

effective functioning of the markets on which we report.


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Appendix


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Platts eWindow

With the advance of technology and the need for faster communication between

Platts and market participants, Platts has more recently adopted use of an online

communication tool known as the Editorial Window, better known as eWindow,

which is one of the ways that enables Platts editors to collect data on market activity

quickly and efficiently, and in the process market participants are afforded a clear and

in-depth view of oil market data, including bids, offers and trades that are being

communicated to the editors.

The eWindow technology was developed by IntercontinentalExchange Inc. (NYSE;

ICE). While eWindow is used by Platts as a data gathering tool ahead of its

assessment activity, market participants can choose to consummate trades on an

OTC basis via ICEs trading platform.


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Platts eWindow


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Exclusions from the Platts price assessment process

Platts has the ability to exclude, a market participant from the MOC price assessment process if itdetermines that doing so is necessary to conform to Platts methodology and maintain the qualityof Platts assessments.

Such exclusions are normally limited to a particular product and a particular geography, whilePlatts carries out checks to ascertain why its assessment guidelines were not followed. Platts hascriteria for determining when to make exclusions and there may be a number of reasons toexclude data from a particular market participant, including:

the posting of bids and/or offers that Platts editors believe are demonstrably out ofmarket;

an unexplained failure to perform on a bid or offer if a counterparty hits that bid oroffer;

an unexplained failure to follow through on the terms of a transaction;

concerns over late deliveries or of substandard qualities; and

poor logistics or poor management of the myriad processes stemming from the momenta sale occurs to the point a product is safely delivered and paid for.

Platts will conduct a period of editorial review for excluded parties, which typically involvesdiscussions with the entitys management to seek assurance that Platts public methodologyguidelines will be followed in the future.

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