Major Banks And Oil Giants Collaborate for a Ethereum Blockchain Commodity Trading Platform
An Ethereum based blockchain trade finance platform will be employed by Commodity traders, including Shell and Mercuria, in collaboration with a number of international banks. The aim is to make this platform to establish as the standard for the commodity trading industry.
Komgo SA, an Ethereum based ConsenSys based in Geneva, has developed out of the Easy Trading Connect project, a partnership between Dutch bank ING, and France’s Société Générale and Mercuria energy company.
The blockchain-based digital ledger system will enable tracking commodity transactions, such as oil trades. The project and the independent company is a larger collaboration of those three companies and an additional 12 founders, including Gunvor Group, and Royal Dutch Shell Plc on the commodities side. The partnering banks include ABN Amro Group NV, Macquarie Group Ltd, Cooperative Rabobank UA, Mitsubishi UFJ Financial Group Inc, BNP Paribas SA, Natixis SA, Citigroup Inc, and Credit Agricole SA.
According to a Bloomberg report from September 19, the three largest independent oil traders – Vitol Group, Glencore Plc, and Trafigura Group along with BP and Total are absent from the collaboration. Chief Technology Officer Toon Leijtens stated:
“The potential that distributed ledger technologies (DLT) have in transforming the commodities sector is clear as evidenced with the success of the Easy Trading Connect experiments.”
To accomplish their aim of establishing industry norms, the new trade finance venture is planning two product launches in 2018: a know-your-customer database that will enable encrypted documents to be exchanged via the blockchain and a blockchain-based digital letter of credit facility. Souleima Baddi, a senior trade-finance banker at Societe Generale SA and chief executive officer of komgo SA said,
“The launch of Komgo SA highlights a shared vision for industry innovation and underlines the ongoing commitment among members to build a truly open and more efficient network.”
The blockchain technology is pegged to transform many industries. A recent report by the World Economic Forum foretells emerging “Fourth Industrial Revolution” technologies like blockchain could reduce a global trade finance gap by $1 trillion. Komga SA is likely hoping that collaboration among oil and commodities traders and international banks on a trade finance blockchain spurs wider adoption.
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