Newcomer of the year: Eleox

New technology is undoubtedly revolutionising energy trading. However, progress has primarily centered on pre-trade activities, with the post-trade landscape at many energy trading firms remaining inefficient. Error-prone manual processes, inaccurate data and a lack of standardisation still dog trade confirmation, gas scheduling, volume actualisation and invoice reconciliation. Cost inefficiencies and delays in processing and settling transactions are rife, exposing firms to fraud, operational and market risks.

Step forward, Eleox, a post-trade technology firm launched in 2021 that is addressing these pain points. Winner of Energy Risk’s Newcomer of the year award, Eleox was founded by energy titans BP, Castleton Commodities, Koch, Macquarie, Mercuria and Shell, to create a platform where multiple counterparties can securely settle the entire post-trade lifecycle of physical commodity transactions.

“[The platform] enables frictionless, real-time communication between market participants, improving operational efficiency and enabling valuable human resources to focus on revenue-generating activities,” says Matthew Almy, chief executive at Eleox. With automation technology eliminating the need for manual data entry and improving data quality, Eleox significantly reduces error rates and resulting risk exposures, he adds. The firm expects the platform to reduce post-trade processing costs by 20–40%.

Built on distributed ledger technology, the platform offers the highest levels of data security and transparency, which is vital for the firm’s founding customers. “Eleox’s OxPair distributed ledger solution has improved efficiencies across trade confirmations, scheduling and settlements, supporting us in reducing the time it takes to confirm trades and improving our ability to manage operational data,” says Doug Meador, senior managing director in Macquarie Group’s commodities and global markets business.

Almy says that the six founding firms have provided “countless hours of subject matter experts’ time” to help design Eleox’s products, in addition to investing capital. This valuable and unique insight is ongoing, allowing Eleox to refine its offering constantly.

Over the past 18 months, Eleox has delivered three main automated processes: trade confirmation, pipeline invoice reconciliation and gas scheduling.

OxPair provides secure, immutable and private real-time trade confirmation. It identifies any inconsistencies between counterparties’ energy trading and risk management (ETRM) systems and notifies both parties. It records the confirmed transactions on both parties’ private, permissioned ledger, resulting in legally binding contracts.

“Today, all of our customers confirm their physical natural gas trades with each other on our platform, resulting in billions of dollars of notional transactions confirmed annually,” says Almy. Since going into production, Eleox has processed over 200,000 confirmations.

Meanwhile, OxSettle standardises and digitises the invoice reconciliation process between counterparties by aggregating invoice details from pipelines and firms’ ETRM systems. This allows users to view pipeline invoice discrepancies at a granular level, reducing the time and effort required to match and verify invoices.

The firm’s most recent delivery, OxNom, offers a significant advancement in automating gas scheduling on US and Canadian pipelines. The platform is a single interface for gas schedulers, communicating and reconciling in real-time with ETRM systems and enabled gas pipelines. OxNom eliminates the need for error-prone spreadsheets that operate outside a firm’s risk systems. Users can view position summaries, submit pipeline nominations and view scheduled quantities for each nomination cycle. Eleox’s customers account for roughly 15% of the US wholesale gas market by volume.

“Implementing Eleox’s OxNom has revolutionised our scheduling process,” says Kurt Wissner, chief information officer, Americas, at Mercuria Energy America, who says the firm now schedules “a material portion” of its business through OxNom. “Trade data flows effortlessly from our ETRM to OxNom, where we schedule natural gas movements with pipelines,” he says. “The final scheduled volumes are then automatically updated in our ETRM, eliminating the need for manual, time-consuming processes.”

OxOracle, a standardised industry dataset, underlies the Eleox platform. By mapping their ETRM system data names to an Eleox data name, users see their proprietary system language while communicating in an industry standard language.

While Eleox’s initial focus has been on US physical natural gas, its cloud-based platform is commodity and risk system agnostic, scalable and API-driven, enabling the firm to expand into new markets quickly, says Almy. “Eleox’s vision is to be the leader in energy commodity post-trade infrastructure,” he says.

For its next stage, the firm is attracting more companies to the platform, expanding its offering, and increasing the benefits for its users.