HSBC has successfully completed a live letter of credit (LC) transaction between Australia and China using Voltron, a blockchain-based trade finance platform that officially launched last October, according to the enterprise blockchain website Ledger Insights.
The transaction was conducted in collaboration with two HSBC clients – Australian wool broker and buyer Fox & Lillie, which sent a shipment of wool to China SDIC International Trade Nanjing Company.
“As a trading company, we’ve long dealt with issues in paper-based transactions including the lengthy time needed in the exchange of documents, delays caused by amendments and lack of security and transparency,” said Yang Xiaoxiong, chairman of China SDIC International Trade Nanjing Company.
“We are ready to further explore the new technology more broadly together with our banking and trading partners.”
China is the world’s largest issuer of LCs by value, reaching nearly $750 billion in 2018. Ajay Sharma, HSBC’s Asia Pacific regional head of global trade and receivables finance commented: “Digitising this market will shake up trade finance in China – reducing the amount of paperwork required to complete a transaction, shortening turnaround time and greatly lowering the cost of trade.”
Milestone for Voltron
HSBC is among the founding members of Voltron, which officially launched last October and initially began as a project within the R3 blockchain consortium. Along with HSBC and R3 other founding members wer Bangkok Bank, BNP Paribas, CTBC Holding, ING, NatWest, SEB, Standard Chartered, Bain and CryptoBLK.
By leveraging R3’s open source blockchain platform Corda, Voltron aimsto digitalise the LC process which can significantly lower transaction processing time and cost.
The first live transaction using Voltron pre-dates its launch. In May 2018, HSBC and ING completed a blockchain-based trade finance transaction for a shipment for soya beans from Argentina to Malaysia for the food and agriculture conglomerate Cargill.
In November 2018, HSBC India and ING Bank Brussels successfully executed a blockchain enabled, live trade finance transaction jointly with Indian energy group Reliance Industries and US-based Tricon Energy.
Last month, reports suggested that HSBC wants more banks to get involved in the initiative. Joshua Kroeker, HSBC's innovation director on blockchain, said that the bank aims to commercially launch the Voltron platform in the near future.
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