Get ready for a new slew of trading platforms and terminals, and ironically, based on trading "old" basic commodities rather than new cryptocurrencies. A blockchain-based platform backed by a high-powered consortium of big banks, trading firms and energy companies, amongst others, plan to introduce energy trading later this year and then move into other commodities (wheat, metals, etc.) in the future. Cool name too; komgo SA. This is the first to launch after a few years of testing and all are invited to join. Look for the CME Group, Intercontinental Exchange (ICE), etc. to roll out competitive platforms as well. Blockchain applications put to use in a new sector - exciting times!
(Bill Taylor/Fintek Capital)
"LONDON (Reuters) - Global banks and trading firms are launching the first blockchain-based platform for financing the trading of commodities from oil to wheat, they said in a joint statement on Wednesday.
The platform will be run by a venture called komgo SA, based in Geneva, Switzerland, and is due to go live later this year.
Banks and major trading firms have been testing numerous pilot schemes across commodities over the last few years but this venture will be the first that any firm can join.
The komgo founders include ABN AMRO, BNP Paribas, Citi, Crédit Agricole Group, Gunvor, ING, Koch Supply & Trading, Macquarie, Mercuria, MUFG Bank, Natixis, Rabobank, Shell, SGS and Societe Generale.
Blockchain, originally the platform behind cryptocurrency Bitcoin, is viewed by many as a solution to trade and settlement inefficiencies, and to improving transparency and reducing the risk of fraud.
A high-tech ledger, blockchain uses a shared database that updates in real-time and can process and settle transactions in minutes without the need for third-party verification.
Instead of sharing a mountain of paperwork between a long list of parties, a trader will instead be able to use a digital letter of credit, speeding up transactions considerably.
komgo will first be used for energy. The first trades will be crude cargoes in the North Sea, the benchmark setting region for much of the world’s crude trading..."