Trading heavyweights launch their proprietary blockchain
A consortium of companies active in commodities announced Wednesday the launch of Komgo (click here). This Geneva start-up is in charge of developing a blockchain platform to facilitate transactions between extractors, traders and financiers and to reduce the mobilization of capital.
The platform is expected to be operational by the end of the year, with two solutions covering the beginning of the production chain. The first is intended to harmonize the verification of customer identity (know your customer, in jargon) and the second to the digitization of letters of credit.
“We have worked with the industry to define the priority issues and encourage the acceptance of a single solution by the entire market,” says Souleima Baddi, Komgo’s director. It was already his team that was at the origin of the first tests last year with Mercuria and Louis Dreyfus Commodities
This is a revolution for international trade, where paper is still law. “Traders will no longer have to repeat the same procedures for the dozens of banks and counterparties they work with,” says Souleima Baddi.
Fifteen heavy hitters from the industry boarded on the project. These include BNP Paribas, Citibank or Crédit Agricole CIB banks, BP or Shell oil majors, and Gunvor and Mercuria dealers, both based in Geneva. Komgo guarantees that they will not have access to any of their data, which will on
Gains of 30 to 40%
In addition to security, blockchain technology mainly ensures faster transactions. And therefore a reduction in funding cycles. In the sector, we talk about two to three weeks of savings on month of funding.
In an interview with Le Temps, Mercuria’s co-founder, Marco Dunand, highlighted the “archaism” of the bills of lading, estimating potential cash-flow gains of 30-40% across the entire production chain. In parallel with Komgo, the VAKT blockchain project is underway to digitize these property titles in the heart of world trade since the Roman expansion.
The blockchain initiatives have been running for two years. Last year, BNP Paribas announced a private blockchain project to improve internal treasury operations before joining Komgo.
SGS is also a co-shareholder of Komgo and VAKT, without fear of being disrupted one day in its inspection and certification activities. “At every stage, the need for physical verification of goods remains the same,” said a spokesman. It’s the way to communicate information that changes. “