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Digitalization in Commodities Trading: Opportunities and Challenges

Alessandro Sanos, CAIA, SCR
Alessandro Sanos, CAIA, SCR
Global Director Sales Strategy & Execution, Commodities, Refinitiv

As digital forces continue to disrupt and transform the commodities trading arena, market participants have ever-increasing access to a plethora of data as well as the digital tools and analytics platforms needed to interpret and use this data.  A new special report from Refinitiv explores how traders can embrace the opportunities presented by this shifting landscape and ensure that they remain competitive in a changing market.

  1. Digitalization in the commodities trading arena has led to sweeping changes that have leveled the playing field and enhanced transparency, in the process presenting both new opportunities and new challenges.
  2. Access to data is not enough, and true success hinges on how quickly and how accurately companies can extract maximum value from the data they have.
  3. Technology is altering the landscape in a host of different ways – including changing hiring patterns – and those that embrace these changes are most likely to maintain competitive advantage in the new decade.

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True digital transformation of commodities trading

A new Refinitiv special report, produced in collaboration with Boston Consulting Group, takes a critical look at digitalization in the commodities trading space, and examines the new opportunities and challenges facing market participants.

‘The Digitization of Commodities’ unpacks the profound changes that have characterized the industry over the last decade, as both the scope and sheer volume of available data within the commodities ecosystem have grown exponentially.

These changes have leveled the playing field, with virtually all commodities traders and analysts now able to access crucial data and near-real-time insights that were previously available and affordable to only a select few.

The data explosion has effectively eroded the old ‘information edge’, delivering enhanced levels of transparency in an industry that has long been mired in opacity.

Whilst this is good news for all stakeholders, maintaining a competitive edge in an increasingly competitive market means that incumbents must urgently review their existing strategies and move away from the ‘business-as-usual’ approach of investing in data and technology to true digital transformation.

Such transformation involves continuously anticipating and responding to changes and challenges, rather than conducting a series of distinct and sequential adaptations or technology upgrades.

It also demands a disruptive vision; a willingness to experiment; and the strong support and commitment of the C-suite and senior management.

Extracting value from data

Although many organizations already have access to a wealth of data, many continue to spend significant amounts of time and resources discovering, evaluating, ingesting, mapping, normalizing, and analyzing data that is presented in different formats and derived from multiple, often disparate sources.

Based on discussions with market participants, this non-negligible task can take up to 80-90% of an analyst or data scientist’s time before they can even begin to extract actionable insights.

Inefficiencies such as these can erode competitive advantage, but partnering with a trusted technology provider able to offer a holistic approach can solve this dilemma.

Refinitiv delivers access to comprehensive, trusted and up-to-date data on global commodities markets.  Our unique collaborations and partnerships mean that we can deliver access to the work of hundreds of analysts in one seamless environment, and our integrated solution enables you to extract maximum value from your data in a cost-conscious manner.

Our Eikon desktop solution and Elektron Platform for specialist trading data delivery have both been specifically designed to enable efficient commodities trading, and our cloud-based, in-house infrastructure, the Refinitiv Data Management Solution, offers streamlined data warehousing.  Our feeds provide non-streaming, fundamental and historical high frequency data across global asset classes.

We also offer the option of accessing all of our information via our platforms or integrating it with in-house visualization or data management systems via our Open APIs framework.

Technology and changing talent patterns

Technology is not only enhancing efficiencies and lowering costs, but is also changing hiring patterns and reporting lines.

Alongside industry-wide technological changes, talent demographics are also changing.  We have witnessed a new generation of traders and analysts emerge – a generation able to navigate the digital world, code, and interact with data.

This, in turn, has led to commodities trading houses increasingly hiring data scientists.  Moreover, Chief Information Officers and Chief Technology Officers now frequently report directly to CEOs as their strategic roles become more crucial.

As the transformation of commodities trading continues, those players able to embrace these and other changes will undoubtedly emerge as the success stories of the new decade.

The changes of the last few years show no signs of abating – in fact, they are likely to continue with accelerating speed and complexity.

The leaders of the 2020s will be those forward-thinking organizations that recognize the transformative role of technology in managing data and generating insights, and that succeed in harnessing knowledge, the most valuable commodity of all, and using it to make informed decisions faster than their peers.

Download and read the full report here.

Additionally, we’re delighted to invite you to Energy Interactive 2020, by Refinitiv. Join us for a day of discussion and exploration, helping you to get ahead of the changing energy complex.

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