Commodity trade will be replaced with blockchain?
Reviewing and compile blockchain industry topic, updating market references and research environment.
Today, we are picking up commodity finance based on blockchain technology.
Japan’s MUFG Bank announced it completed its first live blockchain transaction on the commodity trade finance platform, komgo. MUFG executed a letter of credit in London for commodity trader Mercuria.
The platform offers trade finance products such as letters of credit, standby letters of credit and receivables discounting. Additionally, it has a Know Your Customer (KYC) compliance solution, which standardizes the KYC process without using a central database.
As commodity market, the metals price index fell nearly 2 percent in the third quarter of 2019 (q/q) after two consecutive quarterly increases. The decline reflected a slowdown in global manufacturing activity, a prolonged stall in trade negotiations between China and the United States, and receding supply concerns for some metals. Metals prices are projected to ease modestly in 2020 following an expected decline of 5 percent in 2019. Risks to this outlook are tilted to the downside and include a sharper-than-expected global downturn and less effective policy stimulus in China.
Fujitsu announced a partnership with Switzerland-based startup Rice Exchange (Ricex) for its blockchain rice trading platform. The Ricex platform is scheduled to launch in 2020.
The blockchain platform aims to streamline the trading process by providing insurance, shipping information, inspections and automated settlement to participants.
The Qianhai Mercantile Exchange (QME) and Ant Financial launched a blockchain warehouse receipt alliance, which is commodity trading platform and a subsidiary of the Hong Kong stock exchange (HKEX) which also owns the London Metal Exchange.
By using blockchain technology, warehouse receipts can become standardized assets, improving their risk profile for financial institutions. In turn, it will enhance liquidity for small and medium enterprises, based on their credit rating and performance of the commodity market.
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