Major banks in blockchain commodity trading deal
Written by Anthony Strzalek
Some of the world’s largest banks, trading houses and energy companies have announced a joint venture that will develop a blockchain-based digital platform intended to transform post-transaction management of physical energy commodities trading.
The new venture, which will be managed and operated as an independent entity, is awaiting relevant regulatory approvals.
The consortium participants include BP, Shell and Statoil; trading houses Gunvor, Koch Supply & Trading, and Mercuria; and banks ABN Amro, ING and Societe Generale.
The new venture seeks to create a secure, real-time blockchain-based digital platform to manage physical energy transactions from trade entry to final settlement. The platform will be open to the commodity industry and designed and stress-tested by its investors who constitute a key segment of its user base.
The intent is to move away from traditional and cumbersome paper contracts and operations documentation to secure, smart contracts and authenticated transfers of electronic documents.
The platform aims to reduce administrative operational risks and costs of physical energy trading, and improve the reliability and efficiency of back-end trading operations for all supply chain users.
Over time, the new venture intends to lead the migration of all forms of energy transaction data to the blockchain, improving data quality, further strengthening security and increasing the speed of settlements industry-wide, while reducing the cost for industry participants.
The platform is expected to be operational by the end of 2018.