Digitised ownership and electronic certification to overcome manual, paper based processes.
The Challenge For Commodities Exchanges
Traditionally, commodities trading has paper based, and manual with multiple touch points. Managing the ownership of physical goods along with the actual whereabouts and cost and quality of storage has been a major challenge and held some exchanges back from achieving growth.
When we were approached by a major European Exchange, we worked together on an ambitious vision to overcome some of these challenges, to simplify some of their processes and help them expand into new markets.
We started by digitising commodity ownership. Digitisation allows silos to issue electronic certificates or warrants to exchange’s member firms. Certificates and warrants represent warehouse or storage receipts and give evidence of a commodity product in storage.
The solution now enables this exchange to manage ownership and possession of physical goods, facilitate the transfer of the title and holding of collateral, and enables asset finance, repos, securities lending agreements and other financial instruments.
Using electronic certificates or warrants has helped them increase efficiency, simplify operational processes, provide greater transparency, and give clear, enforceable title to goods held in storage.
The system also makes it easier for silos to issue, transfer and manage certificates and warrants, and ensure rent payments for stored goods are correctly administered. By enabling documentation such as quality analysis reports to be attached to each warrant, the system helps increase confidence in the transaction and the goods being delivered.
This digital certificate management now forms a core module in SinaraTLC, the trading lifecycle platform brokers, exchanges, clearers and custodians.
Background On The Original Project
The project itself started with a basic specification outlining some of these goals and the overall vision. A lot of detail had to be worked out through discussions between Sinara and the client’s commodities team, major silos, market participants and other stakeholders. In parallel, Sinara rapidly developed a prototype application and proof-of-concept system that showcased real-time warrant creation and issuance.
The software was implemented in C# using ASP.NET MVC and SignalR, as well as HTML5, CSS, Typescript and a number of other open source and pre-built Sinara libraries. It was initially hosted upon Sinara’s own servers to make it easy to access for the exchange’s testers and other external parties. The team then worked closely with the client’s IT department to transfer the final system onto their own hosting environment.
Sinara continues to provide support and maintenance for the software under our advanced support process.