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Commodity traders, energy majors, and large banks have set up a new venture to digitalize and facilitate commodity trade through a blockchain-based open platform, one of the banks in the venture, France’s Societe Generale, said on Wednesday.
The new venture, komgo SA, will see the participation of Big Oil’s Shell—which has a vast commodity trading division—commodity traders Gunvor, Mercuria, and Koch Supply & Trading, as well as banks ABN AMRO, BNP Paribas, Citi, Crédit Agricole, ING, Macquarie, MUFG Bank, Natixis, Rabobank, and Societe Generale, and inspection, verification, testing and certification company SGS.
Komgo SA aims to launch two products before the end of this year. The first product will standardize and facilitate the know-your-customer (KYC) process without using a central database. The second product will be digital letters of credit, allowing commodity houses or other platforms to submit digital trade data and documents to komgo customer banks of their choice.
The blockchain platform will be developed in partnership with ConsenSys, a global formation of technologists and entrepreneurs building applications, infrastructure, and solutions on the Ethereum network.
“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” said Toon Leijtens, Chief Technology Officer of komgo.
“Komgo will be an open financing platform, changing finance processes around commodity financing. This will increase efficiency and reduce risks and costs. The platform is designed to be connectable to other commodity platforms,” said Karin Kersten, Head of Trade and Commodity Finance at ABN AMRO.
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Earlier this year, energy majors BP, Equinor, and Shell, commodity traders Gunvor, Koch, and Mercuria, and banks ABN AMRO, ING, and Societe Generale created VAKT, aiming to provide a universal blockchain-based platform for post-trade activity management.
“Due to a strong overlap of shareholders between komgo SA and VAKT, incorporated in 2017 to develop a blockchain based post-trade processing platform for commodities, the two companies will explore synergies between both platforms moving forward,” Societe Generale said today.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.