Reports Disruptive Technologies in Commodity Trading | Page 18

Disruptive Technologies in Commodity Trading Markets
A ComTechAdvisory Report
Blockchain
Blockchain (also known as distributed ledger tech-
nology) has become a buzz word that attracts a lot
of interest, but is it really mature enough for broad
commercial acceptance and deployment in the com-
modities markets?
Though interest in this market is high and invest-
ments are being made, much of the activity at the
moment is in the form of proof of concepts, though
there are a number of commercial offerings as well.
Experiences to date have shown that, while still rap-
idly evolving, there are performance concerns, high
development costs, and concerns related to develop-
ing the concensus business models that will govern
all participants in any market or application built on
blockchain. These issues, and perhaps others, may
be reflected in the results of our survey (Figures 1 &
2) that show perhaps a healthy degree of skepticism
in the short-term around blockchain investments.
Nonetheless, our respondents do indicate that they
see blockchain as the technology most likely to dis-
rupt business processes (Figure 5 above).
Much of the current commercial development in
commodity trading and financial market blockchain
solutions have been via consortium efforts and are
generally focused in the following areas:
1. Peer-to peer trading – both wholesale and in local
prosumer markets
2. Smart contract enablement
3. Trade finance
4. P
 ost-trade processing
5. T
 racking of ownership
6. P
 rovenance tracking/traceability.
There are a number of these consortium efforts tar-
geting specific areas of the commodity supply chain,
including peer-to-peer trading platforms and applica-
tions to track ownership, ensure traceability and en-
able smart contracts. It is more or less impossible to
document all of these initiatives currently underway
however, a few of the more important ones are:
• VAKT, created in late December 2017, includes
participation from a group of oil companies and
banks including BP, Equinor and Shell, Gunvor,
Koch Supply & Trading, Mercuria, ABN Amro, ING
and Société Générale, who contributed capital to
develop an industry-wide solution in post-trade
processing for commodities via blockchain.
• Easy Trade Connect - The Easy Trade Connect
(ETC) platform, which was initiated by ING, has
been subject to testing by a number of global trad-
ing firms. More specifically, Louis Dreyfus piloted a
POC focused on agricultural products such as soy-
beans and involved a shipment of soybeans from
the U.S. to China, with all of the relevant documen-
tation (including the sales contract and the letter of
credit) existing within the platform.
• Enerchain – a blockchain-based distributed ledger
targeting energy trading and covering the entire
trade cycle commenced in May 2017 with 23 par-
ticipants and now has over 40 companies involved
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