A workgroup of 14 banks has created a working proof-of-concept (POC) trade finance registry (TFR) that can enable trade banks in detecting potential duplicate financing of the same cargoes.
Led by DBS Bank and Standard Chartered, and supported by Enterprise Singapore (ESG) and endorsed by the Association Banks of Singapore (ABS), the registry aims at enhancing lending practices and improving transparency in commodity trade by serving as a secure central database for trade transactions financed across banks in Singapore.
«In today’s context, banks are able to conduct such validations only within a single customer entity or across their individual banking network, with no view of what other banks have financed or undertaken payment obligation against. This information asymmetry is a key gap that can only be addressed with a TFR that facilitates collaboration across industry players and government agencies,» an announcement on Tuesday explained.
The POC, which was developed on a blockchain network supported by technology provider dltledgers, was completed in three months. Other participating banks included ABN AMRO, ANZ, CIMB, Deutsche Bank, ICICI, Lloyds, Maybank, Natixis, OCBC, Rabobank, SMBC and UOB.
Building Resilience
«Building greater resilience in the industry ecosystem is even more important today as businesses and economies continue to deal with the impact of prolonged trade disruptions,» Sriram Muthukrishnan, global head of trade product management, DBS Bank, said.
«The Trade Finance Registry marks an important step towards fostering greater transparency through collaboration and strengthening lending practices in Singapore’s banking sector while ensuring a secure operating environment for the industry as we progress towards an increasingly digital trade future,» he added.
DBS and Standard Chartered will work with ABS to implement the TFR as an industry utility in Singapore, before expanding it globally to cover major trade corridors at a later stage, the announcement said. Going forward, ABS will manage the TFR, supported by a Standing Committee represented by the ABS Council member banks. Three Working Groups of banks will be set up to jointly lead the governance, technical development and business scope of the project. ABS will be inviting all banks to join the TFR as members.
