Dutch bank Rabobank, international trading firm Concord Resources and warehousing firm PGS are developing a blockchain trading platform for the metal repo financing business, the companies said.
The parties signed a letter of intent and have already started developing the system, known as Beyond Commodities. Its goal is to drive efficiencies, traceability and transparency in metals trading - specifically in the repo financing business.
The initial scope of Beyond Commodities is to digitally settle a metal repo transaction in which an aluminium position stored at PGS will be sold and re-purchased by Concord to and from Rabobank, a large trade finance and repo institution, over the platform.
This enables all players to settle the transaction in a secure and transparent way at a fraction of the current settlement times, with the vast majority of the emails and paperwork that are part of a metals transaction to be automated and stored in the blockchain, the companies added.
The blockchain technology will track metals from the point of trade through to warehouse storage and end-delivery, with greater visibility for all parties involved in the transaction. It will also directly connect and link into the systems used by Concord and PGS so that no information will need to be rekeyed.
Peter Zonneveld, global head for structured inventory products for the Netherlands-based bank, said that a metal trade can be a highly cumbersome process involving multiple parties and large amounts of material traveling over long distances.
“Implementing a blockchain initiative, which helps to improve the ease of a transaction, traceability of the product and transparency of the trade, will mark a big step-change for the sector,” he said.
Mark Hansen, Concord chief executive officer, noted that technology developments can help to build trust, encourage efficiencies and enhance transparency.
“Bank commodity funding of the supply chain is a complex process involving layers of documentation, and this initiative will digitalize the process while reducing risks,” he said. “Concord wants to be forward-thinking in implementing blockchain technology in our relevant metals markets."
Ionita Consulting acted as the information technology and blockchain solution provider.