Original from GTR published in 24 July 2019.
Singapore-based blockchain platform dltledgers will soon expand to Japan, Australia and Dubai, as well as launch two new features that will make it easier and cheaper for commodity traders to access finance for their transactions.
The blockchain startup has announced that more than 30 banks and 340 trading houses are now onboarded to the platform, which has facilitated more than S$1bn-worth (US$730mn) of trade finance transactions since its launch 18 months ago.
Based on Hyperledger Fabric, dltledgers is a production-grade solution that enables trading companies to connect to their supply chain network and digitalise trade processes and financing documentation. Smart contracts allow traders to automate the creation of trade flows and build a digitally signed consensus framework among multiple parties.
Banks and other trade finance providers, meanwhile, can offer instant trade financing support through the platform, which facilitates letter of credit transactions and supply chain financing. All parties have full visibility over a transaction they are involved in.
According to Samir Neji, founder and CEO of dltledgers, the most active financers on the platform so far are Standard Chartered and Singapore’s DBS Bank. DBS first announced it was using dltledgers in November, when it financed a transaction for Agrocorp International.
Standard Chartered, meanwhile, announced in January it had completed its first deal, a supplier finance transaction, on dltledgers, also for Agrocorp, facilitating the early payment for agricultural products purchased from Australia and resold to a customer in Bangladesh.
The bank said at the time it completed the transaction within 24 hours, a significant reduction from the five to seven days a conventional transaction would typically take.
Other bank clients include National Australia Bank, Maybank, Rabobank, SBI, ICICI and the Eastern and Southern African Trade and Development Bank (TDB), as well as some of the world’s largest commodity finance banks, which have not been publicly named.
While the majority of the trading companies using dltledgers are based in Singapore, the platform will be expanding to Japan, Australia and Dubai in Q3, following its closing of a US$2.5mn pre-series A funding round with global venture capital firm Walden International, which was announced earlier this month.
Speaking to GTR, Neji says the startup will launch a new feature, called SmartFin, in August. It will enable users to request rates from multiple financial institutions on a single transaction. At the moment trading companies have to agree rates with their banks outside of the platform.
“If all the documents are digitised and digitally signed and consented on the blockchain, the trader can request rates from multiple banks on the platform, instead of going through emails and WhatsApp. Whoever is giving them the best rate is going to win the deal. That goes for both trade financing and foreign exchange,” Neji explains.
The company is also planning to launch an app store where third-party partners can provide applications to traders using dltledgers. This is a similar approach to other new blockchain platforms, including Maersk and IBM’s TradeLens whose applications marketplace will see financial and insurance services developed atop the global trade platform.
Focusing on commodities trade, dltledgers has entered a space that is ripe for innovation. Tedious paper documents and trails have plagued the commodity trader and financier for centuries, with a trade finance deal for a single commodities cargo by sea said to require up to 36 original documents and 240 copies from as many as 27 parties. It can often take weeks, if not months, to complete.
That’s why commodity trading is pinpointed as one of the most promising sectors for blockchain. What’s unique about this technology is that it allows for real-time monitoring by multiple parties, and the exchange of documents in a digital, secure and decentralised manner.
Other parties are also seeking to bring blockchain to the antiquated industry. The komgo platform, for one, went live in December. Founded as an independent venture in August 2018, its 15 shareholders include a mix of corporate and financial players: ABN Amro, BNP Paribas, Citi, Crédit Agricole, Gunvor, ING, Koch Supply & Trading, Macquarie, Mercuria, MUFG Bank, Natixis, Rabobank, Shell, SGS and Société Générale. The platform now facilitates letters of credit (LC), standby LCs, receivables discounting, and offers a know your customer module that allows commodity houses to securely submit digital trade data and documents to their banks.