A consortium of banks, trading companies, an inspection company and an energy major have formed a new venture, komgo, that will seek to digitalise the trade and commodities finance sector through a blockchain-based open platform.
Those involved as follows: ABN AMRO, BNP Paribas, Citi, Crédit Agricole Group, Gunvor, ING, Koch Supply & Trading, Macquarie, Mercuria, MUFG Bank, Natixis, Rabobank, Shell, SGS and Societe Generale.
“The launch of Komgo highlights a shared vision for industry innovation and underlines the ongoing commitment among members to build a truly open and more efficient network within commodity trading,” says Komgo CEO Souleima Baddi.
Easy Trading Connect experiments
The core team of two blockchain based Proofs of Concept (PoC) previously tested in energy and soft commodities trading (Easy Trading Connect 1 and Easy Trading Connect 2) have joined komgo to develop a decentralised Ethereum blockchain-based platform.
“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” says Toon Leijtens, Chief Technology Officer of komgo. “We can now achieve a long-term ambition to improve security and operational efficiency in the commodity trade finance sector.”
The platform will be developed in partnership with ConsenSys. Joseph Lubin, Co-founder of Ethereum, and Founder of ConsenSys, says:“We are now entering a new era of simple and inclusive access to blockchain technology to advance stronger, more collaborative, business relationships previously out of reach. We are thrilled to see leading commodity trade finance banks and commodity houses come together to create komgo, which will radically simplify and accelerate trustworthiness, auditability, and accessibility to trade financing across the industry.”
The venture will start with two products, expected to launch before year end. The first one will standardise and facilitate KYC process without using a central database: the exchange of documents will be executed in an encrypted way over the blockchain on a need to know basis.
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. Due to a strong overlap of shareholders between komgo 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.