Commodity trading
KOMMODO - CTRM for oil trading
KOMMODO is the commodity trading and risk management (CTRM) system that Adeo designed and built for an international physical oil trading and shipping group. Since 2021 it has handled physical cargoes, hedges, valuations and reports every day.
Summary
Every cargo and its hedges, in one system.
A physical trading company buys and sells cargoes of oil and refined products and hedges them on the markets with futures, swaps and options. KOMMODO brings all of this together: it records physical trades and hedges, matches and finalises them, values them every day at market and produces position, results and operations reports. Adeo designed and built it for the client and has supported it in production since 2021.
- Physical trades and hedging instruments in the same system.
- Daily mark-to-market valuation and results by strategy.
- Reports for traders, risk management, back office and management.
Problem
A system to replace without losing its history.
The client worked with a previous trading system holding years of trades and the history of their changes. It needed a new, broader and more adaptable platform covering every instrument the desk uses and carrying the existing data with it: for a trading desk, trade history and continuity of results are not negotiable.
- Years of trades and change history to preserve.
- Physicals, futures, swaps and options to manage together.
- Results to be calculated consistently with the previous system.
Approach
Built around the desk's daily work.
Adeo built KOMMODO around the real workflows of its users: trade entry for traders, positions and valuations for risk management, matching, settlement and statements for the back office. In parallel it developed a migration tool that brought trades into the new system with their full history, and aligned the results calculation with that of the previous system.
- Analysis of trader, risk management and back-office workflows.
- Migration of trades together with their change history.
- P&L calculation aligned with the previous system, for continuity of results.
System
From trade to report, with every step tracked.
KOMMODO handles physical cargoes, futures, swaps, basis swaps, listed options, average-price options and EFPs, including trades between companies of the same group. Trades are matched and finalised, term contracts are followed down to each lifting, and a daily process calculates valuations and results. Every trade type keeps its own change history, which can be queried and restored.
- Trade entry with formula and trigger pricing.
- Matching and finalisation of physicals, swaps, futures and options.
- Daily valuation and P&L calculation, automatic exercise of options.
- About thirty standard reports and PL Inspector to analyse results by strategy and date.
- Permissions by desk, office and group company.
Results
In production since 2021.
KOMMODO has been in daily use since spring 2021. After the development phase, which closed with version 2.0 at the end of 2022, the system moved to ongoing maintenance: fixes and new features requested by users, such as automated import of Platts prices, a volume report for management and, in 2026, full support for average-price options. More than one hundred releases have shipped in all.
- In production since spring 2021.
- More than 100 releases between 2021 and 2026.
- Exit from the previous system with trade history preserved.
- New features added over the years at users' request.
Technology
Desktop client, API and market data connected.
KOMMODO is a client/server application: a Windows desktop client for users and an ASP.NET Core API on a SQL Server database, with real-time notifications to the clients. Platts prices arrive through a scheduled import; forward curves, FX rates and option greeks are loaded from files. Trade changes and valuations feed the client's treasury and trade finance system.
- .NET, ASP.NET Core Web API, SQL Server with Entity Framework.
- WinForms desktop client with Telerik reports.
- Scheduled import of Platts prices and Excel imports.
- Near real-time integration with the client's treasury system.
Lessons
A custom system lasts if it can grow.
The most delicate part was not writing the new system but bringing the past into it: trade history and continuity of results drove the choices as much as the new features. After go-live, a broad data model and an audit trail on every operation made it possible to add instruments and reports for years without redesigning the foundation.
- Migrate the history, not just the current data.
- Align calculations with the previous system before improving them.
- Track every change: it is what makes the system trustworthy for those who control it.
CTA
Do you have a trading or risk management process to digitise?
Adeo designs custom software for complex financial and operational processes, and supports it in production over the years.
Talk to Adeo