VAKT’s vSure Benefits its Users
The VAKT initiative was started in 2018 by a group of oil majors, traders, and trade finance providers who desired to try to solve a problem through collective action. The idea was that physical post-trade processes were too reliant on manual, complex, repetitive and therefore error-prone processes, and that digitalization and standardization of these might bring significant benefit to the industry. “Essentially, we were looking to use blockchain as an excuse to address the lack of standardization,” said Caroline Buyssens, VAKT board member for TOTSA. She went on to tell me that what was really needed was standardization, but that had proven much more difficult and slower than anticipated. In fact, the commodities space has a history of attempts to standardize with organizations like POSC and GISB, for example, yet little progress has been made. As Caroline told me, “Philosophically, everyone agrees but in practice, it is really difficult to achieve.”
However, VAKT is making real progress focusing on an area of the business – barge trades – creating a single source of truth for these commodity transactions and helping to improve collaboration between trade partners, including terminals and inspectors, to create an accurate record of every physical oil trade, operate that trade, and to ensure certainty that the trade will deliver exactly what was agreed, when agreed, every time. Essentially, VAKT is helping commodity firms digitalize various processes and transactions, and it aims to extend its coverage through time. For now, its’ vSure confirmation platform is gaining both in users and trade volumes and helping digitalize that part of the industry.
As Caroline points out, TOTSA’s own use of vSure is really helping with efficiency and certainty, and she would like to see its use expanded to all barge trades in the industry. For that to occur, she would like to see many more counterparties sign up to use vSure. TOTSA’s approach is then to negotiate a master agreement with each counterparty that, in turn, allows it to use vSure for secure confirmation handling – this is one of several options available to users. By doing so, TOTSA saves the effort and expense of sending out reams of faxes and PDF paper documents while ensuring that there are no discrepancies. This latter point is significant as it means there are no delays, resends, or amendments to deal with and so no delay in settlement. She hopes that, in the future, the industry would reach broad agreement to go this route and use VAKT. Despite that, she has already seen good progress in terms of maximizing connectivity between VAKT users and the volumes of trade confirmations done over vSure.
For Caroline, the key to further success is to get other firms on to the vSure platform and then to streamline contract negotiation between it and its counterparties. However, VAKT offers other options beside the negotiation of bilateral MTA, including use of a standard general terms and conditions or, by using its validation feature that allows trade analysts to ensure that all details are correct. After that, she would like to see its use extended to other areas like vessels, realizing however that here more complexity lays in wait making getting to a standard contract even harder. The benefits as she sees them of this initiative are many and include “greater efficiency, cost reduction, lower legal risk and the provision of structure around the process.” She also notes that being a part of VAKT has had the added benefit of making Total clean up its own internal processes in the area, which needs to take place prior to any digitalization attempt. “VAKT accelerates the effort and has additional positive side effects,” she told me. She also noted that the appointment of Tasja Botha as CEO was bringing new energy and experience to bear on the problem such that she expected good progress in the coming months.
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