Newcomer of the year: Topaz Technology

It was 2015 when Jon Fox and a few former colleagues decided to form Topaz Technology. In their previous roles, they had seen many different systems and, in some cases, written and built a few themselves

But there was always something missing. That led Fox, now the chief executive officer of Topaz, and his colleagues to invest time and energy into building a system that unifies risk reporting and risk analytics tools for the commodities market.

Today, Topaz offers real-time cross-commodity pricing and risk management solutions for traders and risk teams. Its clients range from derivatives market makers to energy super-majors and commodities trading houses.

“We spent a bit of time in the beginning creating solid roots for the system, and implementing for every commodity market independently, to have functionality that could support the various nuances of those markets. We did this earlier in the process so we had a system that was going to stand the test of time,” he says.

That investment is starting to pay dividends. Most recently, Topaz signed a major deal with a large Singapore-based energy trader looking for intraday, faster, more accurate and robust portfolio valuations.

Then, earlier this year, global commodity trading firm ERA Commodities went live with Topaz’s risk management and analytics solution across their desks in London and Singapore.

Topaz also secured another deal with IXM SA, one of the largest traders of physical non-ferrous metals worldwide, which opted to use Topaz’s real-time risk analytics platform and order management system.

Use cases

Fox says Topaz has two main use cases. The first is augmenting firms’ existing trading and risk systems without ripping out the legacy system. In this case, Topaz’s technology will sit on top of the existing system and provide clients with all valuations, risks and analytics.

“Obviously augmentation implies an element of integration, but this is a much lower risk activity than doing a wholesale replacement of one particular commodity trading risk management [CTRM] platform with another. That CTRM platform typically winds up being integrated with multiple other systems and so, effectively, is an integration hub. If you’re tearing out that integration hub to put another in, that is a super risky thing,” he says.

Another use case is providing derivatives trading companies with similarly sophisticated functionality as the main system of record, with straight-through-processing (STP) of trades from ICE and CME, for example, into Topaz, alongside easy capture of over-the-counter trades.

Fox says that, in one example, a Singapore-based firm approached Topaz because it wanted more flexibility. “They wanted to do things like real-time profit-and-loss (P&L) decompositions so they could attribute P&L and destructure things such as oil trades, which is not something they could get with a basic [STP] system,” he says.

Growing interest within the region also led to Topaz opening its Singapore office in May 2024. Fox says one of its team members in the UK will move to Singapore to build up the team and manage growth in the region.

Topaz is currently looking at enhancing its physical capability. Fox says the firm has a physical model that works for cargoes, for example, and handles pricing concerns around existing cargo functionality. It is also working on a “mini programming language” to handle complex energy pricing.

“We also have a sophisticated physical pricing module, including internal escalation terms and any other pricing-related concerns,” he says. “We’re continuing to work on that and intend to release an updated version of that model next year.”