Traditional Models of Trading and Brokerage and Emerging Trends

The introduction of the free-market economy from the end of the nineteenth cen­tury and the past hundred years has had a dramatic impact on trading and broker­age. Trading is conducted to generate profits for individuals or a single business entity. Brokerage is conducted from an intermediary position between buyers and sellers. Profits are generated by differentials in prices between the buying price and the selling price. In the late twentieth century, brokerage and trading became more closely integrated. This was partly driven by developments in technology and chang­ing global geopolitics. With the breaking down of national borders in the interests of trade and the increased power of electronic media, the ‘borderless world’ became a reality. In an international and global context, complexity gave way to relative simplicity. Databases continue to expand in size and scope. Contextual complexity is reduced to standardised commoditisation. The total flows of information and its ready accessibility sets an open environment for globalisation.

In the European Union (EU) arena of energy and related environmental trading, the main objective is to optimise the access to environmentally friendly energy at the lowest possible cost. This process of trading is obviously also dependent on the availability of a physical infrastructure. This structure of logistics includes all areas of distribution of commodities but the infrastructure for production and distribution of electricity is particularly important.

The workplace environments of the trading and brokerage personnel increas­ingly resemble the control rooms found in industrial settings. At the same time, trad­ing and brokerage activity in different contexts have become more similar. At times it is difficult to identify the optimum environment and setting for any given control situation. Free-market concepts are governing the principles and methods being used in this daily work. Increasingly, different areas of trading and brokerage use the same types of databases. The concepts of corporate social responsibility (CSR) and other forms of ethics have been developed in these types of industries. Brokerage and trading can be seen as industries of their own accord. Today financial trading and brokerage can be found in many different industry sections and with many dif­ferent applications. In the financial services industry, one area that is growing very rapidly is related to trading in energy and related environmental issues.* In Europe, financial trading and services in the energy sector have been harmonised into one conjoined market for all EU countries and many EU-associated countries (such as Norway). Obviously, in this financial sector, different forms of ethical rules and regulations, such as those regarding insider trading, become very important.! Many different actors have been established across this new market. As an example of this, we have been looking closely at the Swedish company Vattenfall.