When it comes to commodity trading, compliance is a crucial element. It involves staying abreast of and complying with various rules and regulations. Governments, exchanges, and other authorities may have their own set of rules and regulations.
Given the complexity and diversity of the markets, products, contracts, and transactions involved in trading commodities, compliance can be challenging. Moreover, compliance requirements constantly change and become stricter in response to market developments, environmental concerns, social issues, and geopolitical events.
In this article, we’re going to discuss the latest statistics on compliance and how a good CTRM software can help you overcome compliance roadblocks. Continue reading below to learn more.
We will be looking at the following topics:
- What Are the Latest Statistics Regarding Compliance for Commodity Traders?
- How Can Commodity Traders Stay Compliant?
- What Is CTRM?
- How Does CTRM Help With Compliance?
- How Should You Choose a CTRM?
What Are the Latest Statistics On Compliance for Commodity Traders?
When trading commodities, there are many moving parts you need to be aware of. Because of how much information you need to gather and process, compliance may not be one of your priorities right now.
Despite how easy it can be to overlook compliance, you should still take the appropriate steps to ensure you are compliant. Otherwise, your organization may face hefty fines and other penalties. In this section, we’re going to break down some of the latest statistics. These include:
- The Cost of Non-compliance. The cost of non-compliance is high. When traders don’t comply with regulations, they may face penalties, lawsuits, reputational damage, and more. On average, in 2022, organizations lost $4 million in revenue due to a single non-compliance event. This is a 45% increase from the cost of non-compliance in 2011. For 50% of organizations, they say that this amount is 6-10% of their revenue.
- The Internal Audit. A regular internal audit is essential for commodity traders because it helps them check how effective their compliance processes and systems are. Thirty-seven percent of companies perform one or more internal audits per year. These regular compliance audits tend to save organizations up to $2.86 million on average.
- Digital Technologies. Seventy percent of compliance and risk experts said that the recent pandemic increased their reliance on technology and software to improve their compliance operations. Moreover, 86% of companies agreed that innovative digital technologies made it easier for them to identify financial crime. Finally, firms have identified the following risk and compliance functions that can benefit most from technology:
- Vendor oversight
- Compliance policy/activity tracking
- Trade surveillance
- Regulatory reporting
How Can Commodity Traders Stay Compliant?
Commodity traders can stay compliant by following regulations set by the relevant governing authorities, such as the CFTC. With hefty fines and reputational damage on the line, it’s important for you to stay up-to-date with changing regulations. But what’s more important is ensuring these rules are followed correctly. One way to do so is by using CTRM software.
What Is CTRM Software?
Commodity Trading and Risk Management (CTRM) software is a specialized kind of software that can help commodity traders manage all facets of their trading activities, from planning and execution to settlement and reporting.
How Does CTRM Software Help With Compliance?
When it comes to simplifying compliance and reducing risks, CTRM software offers several benefits. These compliance-related benefits typically include the following:
Automated Compliance Checks. Many CTRMs have the ability to perform automated checks on every trade before you execute them. This ensures that each trade complies with relevant rules and regulations. This helps prevent fines or penalties that may arise from non-compliant trades.
- Trade Monitoring. CTRM software may sometimes be able to monitor trades throughout their lifecycle and alert you of any changes or issues that may affect compliance. Then, you’d be able to make any adjustments or take any actions that may be needed to maintain compliance.
- Audit Trails. CTRM software has the capacity to record every detail of every trade in a secure database. This can serve as a complete audit trail for compliance purposes. Depending on what CTRM software you use, details such as date, time, price, and other relevant information may be recorded. These pieces of information demonstrate transparency and accountability and help facilitate audit investigations.
- CTRM software can provide you with various reports that may help you comply with reporting obligations imposed by regulators or other stakeholders. Your CTRM software may also be able to format and submit reports according to specific standards and formats required by relevant authorities.
- Integration With External Data Sources. CTRM software can integrate with several streams of external data sources that provide relevant information for compliance purposes.
- Workflow Automation. CTRM software can automate various tasks within your workflow that involve compliance-related actions or processes. For example, your CTRM software may be able to automate the processes involved in invoicing.
By using and leveraging the features of a good CTRM, you can benefit from increased efficiency, reliability, and accuracy when it comes to compliance and regulations.
How Should You Choose a CTRM Software?
Choosing the best CTRM software for you and your business may be a daunting task. With so many options available on the market, you should take your time to carefully evaluate your needs and find a comprehensive solution that meets them.
Here are some tips to help you choose the right CTRM software for you:
- Identify your needs. Begin by identifying your specific needs and requirements. List down what key features and functionalities you’re looking for in a CTRM. Doing so will help you narrow down your options and focus on solutions that align with your needs.
- Evaluate features and capabilities. Once you’ve identified and listed down your needs, evaluate the features and capabilities of different CTRM software solutions. Look for comprehensive solutions that offer the features you need and have a proven track record of delivering results. We recommend taking a look at the Comcore CTRM software solution.
- Consider scalability. As your business grows, so will your needs. It’s important that you choose a CTRM software solution that can scale with your business and adapt to your evolving requirements.
- Check for integrations. Make sure the CTRM software solution you choose can integrate and work well with other systems and tools that you use as part of your day-to-day business operations.
- Read reviews. Take a moment to read reviews and testimonials from other users to get an idea of how well different CTRM software solutions perform in real-world situations.
Book a Free Demo Today
If you’ve done your research, you may have concluded by now that one of the most comprehensive CTRM software solutions on the market today is ComFin Software’s Comcore.
The Comcore CTRM software solution combines the latest cutting-edge technology with over two decades of CTRM application development. This results in the most cost-competitive and fully featured solution on the market.
With a complete package of front, middle, and back-office features, the Comcore CTRM solution offers you a powerful and flexible solution that can handle all your commodity trading compliance needs. To learn more, book a free demo today.
- Morrison, C. (2022, September 15). Commodity Trading: How To Maintain Compliance In 4 Steps. Conventus Law. https://conventuslaw.com/report/commodity-trading-how-to-maintain-compliance-in-4-steps/
- PwC. (n.d.). PwC Pulse Survey: Executive views on business in 2022. Retrieved March 10, 2023, from https://www.pwc.com/us/en/library/pulse-survey/executive-views-2022.html
- Secureframe. (n.d.). 70 Compliance Statistics To Know in 2022 | Secureframe. https://secureframe.com/blog/compliance-statistics
- World Bank Group. (2023, January 3). Commodity Markets: Evolution, Challenges, and Policies. World Bank. https://www.worldbank.org/en/research/publication/commodity-markets