Swaps are the most common of all price risk management tools. Swaps can allow a producer or consumer, for example, to lock in a particular purchase or sale price for a fixed period of time. The relationship between the underlying industry members does not necessarily change. Of course, locking in prices in this manner does not imply these structures are without risk.

Koch Supply & Trading companies are also innovators in developing other customized derivatives designed to effectively manage exposure to price risk. The companies’ traders combine petroleum and metals trading with hedging instruments to offer risk-management products to market participants such as corporate risk managers seeking to shed commodity price risk and financial asset managers seeking exposure to commodity prices.

Koch Supply & Trading companies deal directly with corporate and investor clients and provide liquidity to banks to hedge their customers’ commodity exposures.

Koch Supply & Trading companies are also leaders in trading structured cross-commodity derivatives that have significant residual (unhedgeable) risks. Transactions utilize various instruments and tools dependent upon the counterparties’ specific objectives.

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