Contour has announced a transaction on its blockchain network between Rio Tinto and Guangxi Shenglong Metallurgical. To meet the needs of its client, Guangxi Shenglong Metallurgical China, CITIC Bank successfully processed import letter of credit (LC) services on the Contour network, bringing innovation to their service model. With this transaction, Guangxi Shenglong Metallurgical has joined Contour as a new buyer on the network. Rio Tinto, together with its advising/presenting bank, DBS Bank, has also been executing a steady pipeline of transactions on the network since May 2020.
This latest trade of iron ore has benefited from an enhanced degree of collaboration. Barriers to the transaction usually caused by an over reliance on paper-based processes can be overcome with this digital solution. Through using Contour’s network, all parties have the autonomy to control and manage their data, with counterparties accessing that information to advance the transaction to the next stage. As a decentralised network, no single party - including Contour - controls the data, ensuring security and privacy for those involved.
“The importance of collaboration across the trade ecosystem should not be underplayed," commented Sriram Muthukrishnan, group head of Trade Product Management at DBS Bank. "There is great merit in having all participants plugged into a single platform with real-time transparency to trade information which has broad applications in international trade, from financing, trade facilitation to settlement and risk mitigation. The value proposition for blockchain is its ease of use and transparency of information on goods, transactions and participants across the entire trade ecosystem. Its immutable properties offer validation that there has been no corruption of the data, enhancing trust between counterparties and banks providing trade finance - which is increasingly critical in the challenging environments we operate in today.”
The Rio Tinto and Guangxi Shenglong Metallurgical news comes just a few days after Standard Chartered announced the successful completion of the first cross-bank Letter of Credit (LC) transaction between Vietnam and Thailand conducted over blockchain, in partnership with Asian Development Bank (ADB), Bank for Investment and Development of Vietnam and Standard Chartered Bank (Thai).
The transaction was also completed over the Contour network, and involved a US$50,000 shipment of plastics from Thailand’s SCG Plastics Co., Ltd. to Vietnam’s Opec Plastics Joint Stock Company. Compared to the paper-intensive and time-consuming processes involved in the traditional methods of trade finance, by digitising the end to end exchange of information and streamlining the process of LC issuance and confirmation, all trade participants achieved a significant reduction in processing time from up to five days to within seven hours.
It also marked the successful completion of ADB’s first credit guarantee using distributed ledger technology, as well as the first of such LC comprising a sell-down feature to be conducted on Contour. The transaction further paves the way for more banks and corporates to collaborate on innovative technology that can support the growth of trade, having demonstrated the ability to complete the trade sell-down process with greater speed and efficiency.
“The coronavirus pandemic has shown that it is essential the trade finance industry quickly digitises operations to make global trade and supply chains more resilient and robust," said Steven Beck, head of Trade & Supply Chain Finance at ADB. "This innovation makes trade more efficient, reduces risk and lowers barriers to entry for small and medium-sized businesses in developing Asia.”
“As one of the founding members of Contour, we are delighted to have co-created this new credit guarantee module with ADB and Contour," commented Sam Mathew, global head of Documentary Trade at Standard Chartered. "The success completion of this pilot marks another remarkable milestone in our journey towards transforming documentary trade with risk participation weaved into the blockchain platform. It also highlights the need for industry players to come together and develop innovative and scalable solutions. We believe this added capability will help to drive scale and adoption in the industry, as well as increase operational resilience for both our clients and partners.”
“With this new functionality to support development bank guarantees, we’re able to further our goal of making global trade accessible, digital and secure for all," added Carl Wegner, CEO of Contour. "Through our continued work with Standard Chartered Bank as well as welcoming ADB to our network, Contour’s work with banks and corporates is helping to define a new global standard for trade - simplifying and removing barriers in the trade ecosystem, and allowing everyone to collaborate seamlessly on one platform. We will continue to strengthen these connections for trade as Contour enters into production in fourth quarter this year.”
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