DBS and Standard Chartered jointly led a workgroup of 12 other banks to create and conduct a digital Trade Finance Registry (TFR) proof of concept (POC) to enhance lending practices and improve transparency in commodity trade.
Supported by Enterprise Singapore (ESG) and endorsed by The Association Banks of Singapore (ABS), the TFR POC aims to be an industry utility by serving as a secure central database for the banking industry to access records of trade transactions financed across banks in Singapore.
This mitigates against duplicate financing from different bank lenders for the same trade inventory, leading to greater trust and confidence among banks and traders alike.
Developed on a blockchain network supported by technology provider dltledgers, DBS and Standard Chartered scoped and developed the POC in the span of three months, with the support of 12 other banks.
The participating banks were ABN AMRO, ANZ, CIMB, Deutsche Bank, ICICI, Lloyds, Maybank, Natixis, OCBC, Rabobank, SMBC and UOB.
Sriram Muthukrishnan, Global Head of Trade Product Management, DBS Bank said,
“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. 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.”
Sam Mathew, Global Head, Documentary Trade, Standard Chartered, said,
“We are pleased to have co-led on this industry-first initiative with our industry peers and dltledgers, and together create a working proof of concept trade registry that can enable trade banks in detecting potential duplicate financing of the same cargoes. Having delivered this in record time from concept to testing, it is testament to the true collaboration between all parties and we hope to further develop the registry alongside ABS.”
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 be addressed with a TFR that facilitates collaboration across industry players and government agencies.
Following the completion of the POC, DBS and Standard Chartered will work with ABS to implement the TFR as an industry utility to enhance trade financing practices within Singapore, before expanding it globally to cover major trade corridors at a later stage.
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.
