Barclays 2008 Annual Report Download - page 125

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1
Business review
Barclays PLC Annual Report 2008 123
Risk management
Market risk management
Disclosures about certain trading activities
Disclosures about certain trading activities including non-exchange
traded commodity contracts
The Group provides a fully integrated service to clients for base metals,
precious metals, oil, power, natural gas, coal, freight, emission credits,
structured products and other related commodities. This service offering
continues to expand, as market conditions allow, through the addition of
new products and markets.
The Group offers both over the counter (OTC) and exchange traded
derivatives, including swaps, options, forwards and futures and enters into
physically settled contracts in base metals, power and gas, oil and related
products. Physical commodity positions are held at fair value and reported
under the Trading Portfolio in Note 12 on page 215.
Fair value measurement
The fair values of physical and derivative positions are primarily determined
through a combination of recognised market observable prices, exchange
prices, and established inter-commodity relationships. Further information
on fair value measurement of financial instruments can be found in Note 50
on page 287.
Credit risk
Credit risk exposures are actively managed by the Group. Refer to Note 47
on page 264 for more information on the Group’s approach to credit risk
management and the credit quality of derivative assets.
Fair value of the commodity derivative contracts
The tables below analyse the overall fair value of the OTC commodity
derivative contracts by movement over time and maturity. As at
31st December 2008 the fair value of the commodity derivative contracts
reflects a gross positive fair value of £44,881m (2007: £23,571m) and a
gross negative value of £45,817m (2007: £22,759m).
Movement in fair value of commodity derivative positions
2008 2007
£m £m
Fair value of contracts outstanding
at the beginning of the period 812 1,561
Contracts realised or otherwise settled
during the period 241 (764)
Fair value of new contracts entered into
during the period (1,245) 243
Other changes in fair values (744) (228)
Fair value of contracts outstanding
at the end of the period (936) 812
Maturity analysis of commodity derivative fair value
2008 2007
£m £m
Not more than one year (2,022) (279)
Over one year but not more than five years 999 773
Over five years 87 318
Total (936) 812