BlockchainNatixis, IBM and physical commodities trading group Trafigura have launched the first blockchain solution in commodity trade finance for US crude oil transactions.

The distributed ledger platform, built on the Linux Foundation open source Hyperledger Fabric, allows “major steps” in a crude oil transaction to be digitised on the blockchain, ensuring that famous trinity of “improved transparency, enhanced security, and optimised efficiency”.

The firms say by having the buyer, seller and their respective banks all on the same ledger, all parties can simultaneously view and share data on the status of a transaction, from the time a new trade is confirmed and validated, to when the crude oil is inspected, to its final delivery and cancellation of the letter of credit.

Arnaud Stevens, Natixis’ New York head of global energy and commodities, says: “The current process is paper and labour intensive, we have multiple friction points with high processing costs and limited automation. Distributed ledger technology brings some much-needed innovation into our industry.”

The solution, which is hosted on IBM’s cloud platform, Bluemix, was led and delivered by IBM France.

According to the companies, the platform will soon be expanded to allow all parties in the transaction to enter data directly onto the blockchain. For example, the shipping company, pipeline operator, inspector or warehouse can provide real-time status updates via the blockchain on the crude oil transaction, “helping lower the risk of fraudulent transactions”.

Natixis is the international corporate, investment, insurance and financial services arm of Groupe BPCE, the second-largest banking group in France spread over two retail banking networks, Banque Populaire and Caisse d’Epargne.

Founded in 1993, Trafigura sources, stores, transports and delivers a range of raw materials (including oil and refined products and metals and minerals) to clients around the world.

@banking
techno