A group of global banks and heavy hitters from the trading and energy sectors have jointly launched a new blockchain-based platform for financing the trading of commodities. The newly developed Swiss-based platform, which will be built on Ethereum’s blockchain will be called komgo SA and it is due to go live later this year.

It brings together a mass of international financing, trading, and production institutions such as ABN AMRO, BNP Paribas, Citi, Crédit Agricole Group, Gunvor, ING, Koch Supply & Trading, Macquarie, Mercuria, MUFG Bank, Natixis, Rabobank, Shell, SGS, and Societe General.

Three of the world’s largest independent oil traders—Vitol Group, Glencore Plc and Trafigura Group, were notably missing from the list—including oil giants British Petroleum and Total, per a Bloomberg report.

“The launch of komgo SA 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,”

Souleïma Baddi, Chief Executive Officer of komgo SA, remarked.

ConsenSys

The joint venture will digitalize trade and commodities, finance processes will be through a blockchain-based open platform that has been developed in partnership with with Ethereum incubator ConsenSys.

Co-founder of Ethereum and Founder of ConsenSys, Joseph Lubin commented on the development in the official announcement:

“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 SA, which will radically simplify and accelerate trustworthiness, auditability, and accessibility to trade financing across the industry.”

However, banks and prominent trading firms have been testing many pilot schemes across commodities over the last few years but this newly launched venture will be the first that any firm can take part in.

“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” Toon Leijtens, the Chief Technology Officer of komgo SA, stated.

“We can now achieve a long-term ambition to improve security and operational efficiency in the commodity trade finance sector.”

Komgo SA Platform

Nonetheless, komgo SA is a secured platform, and is part of an emerging global ecosystem that plans to optimize the whole flow of physical commodity operations.

However, the development team supporting komgo is responsible for two reportedly successful blockchain based proofs-of-concept that have been tested for energy and soft commodities trading, dubbed “Easy Trading Connect 1” and “Easy Trading Connect 2.”

Subsequently from early next year, komgo SA will expand to areas of agriculture and metals, while the first trades will be for the energy industry, particularly trades involving crude cargoes in the North Sea – the benchmark setting region for much of the world’s crude trading.

However, the Komgo SA will work in partnership with Vakt, an energy trading platform used by a large majority of the shareholders in komgo. The platform will also provide the financing via blockchain for all commodities and can scale itself up to new and emerging commodities

“The launch of komgo SA 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” Baddi concluded.

Dutch bank ABN AMRO also spoke on the venture and the different products it expects to roll out in the coming weeks, in a separate press release.

“The first [komgo product] will standardize and facilitate the know-your-customer [KYC] process. The second […] will be a digital letter of credit, allowing commodity houses or other platforms to submit digital trade data and documents to the komgo customer banks of their choice.”