Trade technology provider Vakt says two oil trading giants are now using its platform to conduct all-digital trade confirmations, in what it describes as a first for the industry.

Vakt’s system replaces a series of manual processes — primarily involving paper contracts and back-and-forth over email — for arranging trades in the seaborne oil sector.

Oil traders Gunvor and TotalEnergies Trading have begun using Vakt’s technology to handle their trading of cargoes, the company says in a statement.

The traders are currently using the system for the northwest Europe barge market, Vakt’s chief commercial officer Stephanie Trabia tells GTR, and are in the process of expanding their use of digital confirmations to other markets. Additional counterparties are expected to join soon.

While digital trade confirmations are widespread in sectors such as natural gas, power and commodity derivatives, they have not been adopted for the trading of oil cargoes until now, Vakt says.

The sector relies on manual review of individual contracts and back-and-forth between legal departments when discrepancies arise, according to Trabia.

On Vakt’s platform, trading is conducted under master trading agreements. Each party submits their information on the trade and an algorithm highlights any discrepancies.

The company says the approach will cut down on the risk of errors in trading books and make conducting trades more efficient. A two-way API means that information is automatically transferred to Vakt’s system from traders’ own risk management system without the need for duplicate data entry.

The automatic capture also dramatically speeds up the confirmation process. Because of the fast pace of seaborne oil trading, it is not uncommon for delivery to take place before two counterparties have resolved disagreements over a trade, Trabia says.

Vakt’s analysis of the Amsterdam, Rotterdam and Antwerp barge market found that at least 15% of trades in relevant trading books were incorrect, whether through human error or a disagreement with counterparties, according to an April blog post by the company.

“Being able to confirm waterborne oil trades on Vakt is a major milestone in the digitisation of physical commodity market,” Vakt chief executive Etienne Amic says in a statement.

“Aside from their inherent efficiency, confirmations also create an incentive to normalise the reference data used by the industry, which is well underway at Vakt.”

The company was launched in 2018 by a group of oil companies and trade finance banks as a blockchain platform focused on post-trade management in the commodities trading and finance space.