Standard Chartered and Trafigura have announced the successful completion of the first live oil inventory financing transaction using Singapore’s recently launched electronic data-sharing platform.
The bank says it provided financing for oil owned by Trafigura and held by energy storage company Advario, which provided data elements enabling execution of the trade.
The three companies say in a joint announcement it is the first such transaction to take place on Singapore Trade Data Exchange (SGTraDex), which was launched in June this year as a means of sharing information between trade counterparties that would otherwise be difficult or impossible to access.
“We would like to congratulate Standard Chartered, Trafigura and Advario on their first live transaction on SGTraDex,” says the platform’s chief executive, Antoine Cadoux. “All parties have been instrumental in developing our digital infrastructure and use cases.”
The transaction involved Standard Chartered obtaining title over oil purchased from Trafigura, which was then sold back to the trader within a pre-agreed timeframe. Such arrangements typically serve as a means of maximising working capital for goods held in storage.
The process was entirely paperless, with documents verified using the TradeTrust technological framework that underpins SGTraDex. By managing data-sharing between oil terminals and financing banks, the platform also aims to eliminate the risk of document tampering.
The SGTraDex initiative was unveiled last year initially as a fraud prevention tool, bringing together representatives from the banking, commodities trading and shipping sectors to ensure the same cargo cannot be financed multiple times by different lenders.
It forms part of a broader response by Singaporean authorities and market participants to the string of fraud scandals that hit its commodity finance market in 2020, leading to the collapses of Hin Leong, Agritrade and several smaller traders.
“The success of this transaction demonstrates the viability of electronic oil inventory financing in reducing the risks of double financing and thereby helping to facilitate greater funds accessibility for a wider pool of traders,” says the joint statement from Standard Chartered, Trafigura and Advario.
Stephan Jansma, Trafigura’s chief financial officer for Asia Pacific, adds: “We are working towards SGTraDex becoming a regular feature in the financing of our inventories in Singapore and other import and export flows.”
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