Digitalisation is reshaping commodity trading at an accelerating pace. Singapore has built a reputation as a stable financial centre and, in recent years, has emerged as a major hub for adopting financial technology as a means to innovate and transform.
Vikas Shenoy is head of APAC origination and partnerships at commodities digitisation company Trovio, which provides a platform as a service (PaaS) offering to the commodities industry. Prior to joining Trovio, he spent nearly 10 years in commodities sales and trading with Société Générale, ANZ Bank and Deutsche Bank, across Mumbai, London and Singapore.
Trovio recently announced the establishment of its latest foothold in Singapore; becoming the first fintech company to be welcomed into the Singapore Bullion Market Association (SBMA).
Here Shenoy provides a look into the fast-changing world of commodities digitisation and investing.
In recent years, Singapore has emerged as a major hub for technical innovation across diverse sectors, including fintech, commodities, blockchain and, lately, digital currencies. It has also leaped ahead of Hong Kong and Tokyo in cementing its position as a leading Asian commerce centre owing to its stable political regime and technocratic, forward-looking government, resulting in a fledgling ecosystem of unique companies, supportive legislations, conscious investors, and much more.
The commodities industry has long seen Singapore as a safe harbour due to its favourable tax regime, efficient port and the significant trading volumes it generates. In addition to this, the Singapore government has made huge strides in making itself future-proof and supporting the growth of the fintech industry.
Major industry associations, such as the Singapore Bullion Market Association (SBMA) and Singapore Fintech Association (SFA), supported by the government, have played a key role in bringing the ecosystem together to drive conversations and expand the little red dot’s influence across the globe. In this way, Singapore has successfully married the old world with the new.
According to the Economic Development Board of Singapore, a staggering 80 per cent of the world’s top 100 tech giants — including Google, PayPal and Alibaba — have one or more of their regional headquarters situated in the country. In the past few years, an increasing number of Chinese and western fintech firms have expanded their operations to Singapore, primarily because the Asian financial hub is viewed by most companies as a perfect gateway to international exposure and financial growth.
Underscoring the fintech migration, the SFA, a cross-industry non-profit fostering collaboration between market participants and stakeholders in the fintech ecosystem, has seen its membership more than double in recent times — rising from 350 to 780 between Q3 and Q4 2020.
Trovio’s move to Singapore
Trovio, a Sydney-headquartered fintech that provides a digitisation and registry service for the commodities industry, recently announced its plans for Asian growth by setting up an office in Singapore. For an ambitious company operating at the intersection of commodities and fintech, the city-state seems to be an obvious choice.
It also became the first fintech company to join the SBMA — yet another sign that the traditional bullion industry isn’t in denial about the digital revolution that is upon us. Trovio established itself as a leader in bullion digitisation by becoming technology partner to The Perth Mint, the world’s largest refiner of newly mined gold. It has now set its eyes on the broader commodities market.
Another significant focus area for businesses is environmental, social and governance (ESG) compliance. Singapore looks to be leading the race in building a supportive ecosystem in this respect, too, having announced its Singapore Green Plan 2030 as a leading carbon services and trading hub. The Monetary Authority of Singapore (MAS) is heavily focused on sustainable and green finance and ‘building the capabilities in our financial sector to incorporate ESG considerations into financing decisions and drive long term sustainable economic growth’.
Trovio’s ESG investing product suite meshes well with Singapore. Trovio is shortly launching the world’s first carbon-neutral gold ETF, giving individuals and companies an option for the first time ever to invest in traditional gold in a verifiably carbon neutral manner. As part of its technology offering, Trovio also enables commodities asset owners the opportunity to develop and deploy carbon neutral products in a cryptographically secured and immutable manner.
Digitisation is inevitable at this point
As one of the newest members of the SFA, Trovio aims to introduce an unparalleled level of efficiency and transparency into both the Asian and global commodities markets.
Trovio’s unique digitisation platform grants its partners entry to a variety of different markets, develops new distribution channels using novel technologies, such as the blockchain, and deploys investment products that meet all of the modern investor’s needs.
The digitisation of assets brings some huge benefits, especially in relation to sustainability. Supply chains and assets can now be traced all the way from extraction, processing, transport and storage, to final sale. This allows assets such as commodities to be responsibly sourced, conscientiously financed and sustainably distributed. Understanding an asset’s carbon footprint is a small but important step, yet it is a problem that cannot be easily solved.
Trovio’s provenance and ESG scoring solution is a tool that its partners have come to value immensely. Without overhauling the existing supply chain, it can track an asset, build its digital footprint, and provide data to help companies understand their carbon intensity. Through its partnerships with carbon exchanges, Trovio can build carbon neutral assets that adhere to a high degree of ESG compliance in a transparent and immutable manner.
These digital pathways, previously unimaginable, are now a reality thanks to innovations such as the blockchain. Supportive countries, such as Singapore, provide the perfect springboard for companies like Trovio to use technology to remove inefficiencies in the marketplace and build products for a better tomorrow.