Simon Collins, the ex-head of metals and minerals at trader Trafigura, is gearing up to launch an online platform to match buyers and sellers in physical metals markets.
Collins, a high-profile industry figure who left Trafigura in 2015, said the Tradecloud system would start operating out of Singapore in August. The platform will help traders to verify new counterparties and reduce risk through steps such as checking members’ social media profile and endorsements.
It will also offer a messaging system that will compete with similar ones from Thomson Reuters and Bloomberg and the Symphony system set up by Goldman Sachs.
Tradecloud aims to centralise communication among traders, which is currently spread across different systems including wechat, Skype, email and others. It plans to host tenders for refined metal shipments, moving eventually into minerals and other commodities.
It will also host a service to authenticate counterparty documents with banks and smart contract documentation that may use blockchain technology. The platform is slated for beta testing in May.
Ensuring customers are who they say they are, and metal is where it is supposed to be, has been a live issue for physical metals trading since a $3 billion dollar financing fraud in China’s Qingdao port rocked metals markets nearly three years ago.
As recently as January, some global banks briefly froze credit lines for Singapore metal traders after a unit of commodities giant Glencore uncovered fake warehousing receipts.
“The beginning of the trading process, is how do we know each other? There is all that data out there and it’s a question of capturing it,” said Collins.
Trade in physical metals is not regulated, unlike futures contracts on bourses such as the London Metal Exchange.
(Reporting by Melanie Burton in MELBOURNE. Additional reporting by Pratima Desai in LONDON; Editing by Joseph Radford and Christian Schmollinger)