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Commodities: physical and futures integration

Commodities physical and futures integration is Tranexio’s solution for metals, energy and chemicals and agricultural traders. Physical contracts, price fixing, hedging, futures orders, hedge accounting and integrated accounting sit on one platform: fixing a price produces a hedge recommendation, and futures gains and losses are allocated to order P&L monthly.

Key points

  • One pricing order for every price

    Single price, partial fixing, average price, settlement price, TAS and formula pricing are all managed in the pricing order, with pricing markets maintained as master data.

  • A hedge recommendation on every fixing

    Once a price is fixed, a hedge recommendation is generated automatically. Traders place orders through the futures broker’s trading system on the same platform, and fills update positions and are bound to the physical deal.

  • Exposure visible in real time

    Real-time exposure equals physical position minus hedge position; unpriced contracts appear as contingent exposure, with deviation monitoring and alerts for losses exceeding margin.

  • Integrated physical–futures accounting

    Hedge instructions are bound to physical anchors, futures statements are imported and matched to physical deals, and futures gains and losses are allocated to order P&L monthly.

  • Hedge accounting

    Hedge relationships are designated, prospective and retrospective effectiveness tests run, and fair value or cash flow hedge journal entries are generated under IFRS 9 / CAS 24.

  • Quality and weight settlement

    Quality assays and price adjustments, weight settlement with a three-stage record and deferred-pricing settlement are supported, with the difference between final and provisional prices posted back automatically.

The problem

A familiar pattern at commodity traders: price fixing sits with the sales team, hedges live in traders’ spreadsheets and accounting happens at month-end. There is a time gap between fixing and placing the hedge, exposure has to be compiled by hand, futures gains and losses never reach individual orders, and hedge accounting documentation is pieced together at the last minute.

What the platform does

Step How Tranexio handles it
Price The price fixing order consolidates pricing terms, supporting average pricing, TAS and formula pricing
Hedging A fixed price generates a hedging recommendation; hedge relationships, strategies and target ratios are managed
Trading Multi-account futures orders, positions and risk rules; see Derivatives trading
Exposure A unified exposure view, daily pricing exposure report and daily position snapshots
Accounting Physical–futures integrated accounting, hedge accounting and effectiveness testing
FX Forwards, options and other FX hedging tools, with foreign currency exposure

Where it fits

  • Metals trading, including non-ferrous, ferrous and precious metals.
  • Energy and chemicals trading.
  • Agricultural trading such as soybeans, corn and edible oils.
  • Companies pricing on both domestic and overseas markets that need cross-market conversion.

Key controls

  • Alerts when the hedge ratio drifts outside its target range, with prompt warnings when losses exceed margin.
  • Trading risk rules block over-limit orders before they are placed.
  • The business, trading and derivatives books share one source, so differences can be explained.

Frequently asked questions

Which pricing methods and pricing markets are supported?

Single price, partial fixing, average pricing, settlement price, TAS, fix-in/fix-out and formula pricing, with fixing by the buyer, the seller or by agreement. Pricing markets fall into two types, futures exchanges and physical price reporting agencies, maintained as master data that tenants can extend, covering domestic and overseas markets with currency conversion.

Are futures orders placed within Tranexio?

Yes. The platform provides a multi-account futures trading terminal that connects to futures brokers’ trading systems through the integration hub, supporting order entry, fill reports, positions and pre-trade risk controls; orders can be bound to hedge instructions. Production connections are opened in each project once the broker’s required look-through certification is complete.

How do futures gains and losses reach order margins?

Once hedge instructions are bound to physical order anchors, the system imports futures statements and settlement reports, matches them to physical deals and allocates futures gains and losses to the relevant orders each month. Order P&L then shows both physical margin and the hedging effect.

Are there real-world results?

At one non-ferrous metals trading group, group exposure went from a monthly roll-up to same-day visibility, authorisation changes took effect the same day, and the quarterly derivatives report fell from several person-days to hours. These results are measured against that group’s own baseline and are not a general promise.

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Updated 2026-10-06