Using blockchain technology, the Komgo SA venture will develop a digital ledger-based system to track commodity transactions, the partners said Wednesday. The inclusion of some of the biggest lenders in trade finance may help establish a universal norm after previous efforts to use blockchain faltered.
“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,” Souleima Baddi, a senior trade-finance banker at Societe Generale SA and chief executive officer of Komgo, said in a statement.
Other banks involved include ING Groep NV, ABN Amro Group NV, Cooperatieve Rabobank UA, Macquarie Group Ltd., Mitsubishi UFJ Financial Group Inc., Natixis SA, BNP Paribas SA, Citigroup Inc. and Credit Agricole SA. Koch Supply & Trading LP and inspection giant SGS SA are also among Komgo’s 15 founders.
Notably absent are the top three independent oil traders — Vitol Group, Glencore Plc and Trafigura Group — as well as oil majors and traders BP Plc and Total SA.
The physical-commodities trading industry has long sought a way to use blockchain to modernize the sector, improve security and reduce costs. But the technology has so far been used only for select transactions by firms including Mercuria and agricultural commodity trader Louis Dreyfus Co.
Geneva-based Komgo boasts many of the same shareholders as VAKT, another blockchain venture focused on commodities and based in London. The two companies “will explore synergies between both platforms,” Komgo said in the statement.
Komgo expects to launch two products before the end of the year: a “know your client” database and a digital letter of credit facility.