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HSBC says performs first trade finance deal using single blockchain system

Reuters  |  HONG KONG 

By Sumeet Chatterjee

(Reuters) - Holdings Plc said on Monday it has performed the world's first trade transaction using a single blockchain platform, in a push to boost efficiency in the multi-trillion-dollar funding of international trade.

and Dutch completed the deal for last week when a shipment of soybeans was transported from to via the global commodities trader's and subsidiaries, the British lender said in a statement.

While there have been other trade deals that use blockchain in conjunction with other technologies, the transaction marked the first use of a single, shared digital application rather than multiple systems, said.

The use of in the industry is expected to reduce the risk of fraud in letters of credit (LoC) and other transactions as well as cut down on the number of steps used.

LoCs are the widely used way of financing between importers and exporters, helping guarantee more than $2 trillion worth of transactions, but the process creates a long paper trail and takes between five and 10 days to exchange documentation.

Putting all of Asia Pacific's trade-related paperwork into electronic form could slash the time it takes to export goods by up to 44 percent and cut costs by up to 31 percent, the HSBC statement said, citing a study by the

"The reason why letters of credit have persisted is because of two real challenges -- the absence of digital infrastructure and the challenge of coordinating multiple parties," Vivek Ramachandran, at HSBC's commercial unit told

"This platform helps us overcome the first and I think the technology and everyone focussed on it gives us the impetus to go after the second now with hopefully much better results than we have seen in the past."

Ramachandran said HSBC already had another client lined up for the next similar transaction.

have invested millions in developing in a bid to cut costs and simplify back office processes, such as the settlement of securities trades.

Blockchain uses a distributed ledger maintained by a network of computers to verify transactions, rather than a centralised system. The blockchain application used in the transaction is supported by 12 banks, which could help bring the technology to the market more broadly.

HSBC said the transaction was executed on a platform called Corda, which was developed by R3, a New York-based blockchain consortium whose members include more than 100 banks, regulators and trade associations.

(Reporting by Sumeet Chatterjee; Editing by and Sam Holmes)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Mon, May 14 2018. 15:17 IST