Having successfully tested the use of blockchain technology in oil trading last year, ABN Amro, ING and SocGen have completed a first agricultural commodity trade using their Easy Trading Connect prototype.
The trade, which included a full set of digitalised documents (sales contract, letter of credit, certificates) and automatic data-matching, was used to execute a soybean shipment transaction from the United States to China. The transaction involved user participation on the blockchain-based platform by teams from Louis Dreyfus Company as the seller and Bohi as the buyer, with banks issuing and confirming the letter of credit. Russell Marine Group and Blue Water Shipping also participated in the process, issuing all required certificates.
The partners say time spent on processing paper documents and data was reduced fivefold and the opportunities for documentary fraud eradicated.
“The fully digitalised transaction simulated the traditional 11-14 day process and took only four days to complete,” says Anthony van Vliet, ING’s global head of trade & commodity finance.
Gonzalo Ramírez Martiarena, chief executive officer of Louis Dreyfus Company, believes the technology has the potential to transform the commodities trading industry.
“Distributed ledger technologies have been evolving rapidly, bringing more efficiency and security to our transactions, and immense expected benefits for our customers and everyone along the supply chain as a result," he says. "The next step is to harness the potential for further development through the adoption of common standards, and welcome a truly new era of digital trade flow management on a global level."
The three banks behind Easy Trading Connect last year joined forces with oil giants BP, Shell and Statoil, as well as several trading houses to build a blockchain-based digital platform for energy commodities trading following a successful test on an oil cargo transaction in February.