Address

Precise Investors

Latest News

Singapore banks to create digital trade registry

Singapore banks

DBS Group and Standard Chartered are leading other banks in Singapore to create a central database to access trade transactions

Some of the world’s biggest banks in commodity trade financing are creating a digital trade finance registry in Singapore to try and mitigate the risk of trade fraud and boost transparency after losing billions of dollars due to a spate of defaults.

Banks have reduced their commodities business this year to cut risk following collapses, including that of Singapore’s Hin Leong Trading (Pte) Ltd, which shocked lenders after instances of financial trouble were laid bare by the coronavirus crisis.

In a joint statement issued on Tuesday, DBS Group and Standard Chartered said they are leading a group of 12 other banks in Singapore to create and conduct a central database to access trade transactions financed across banks.

A digital trade registry strengthens trade financing banks’ ability to avoid duplicate financing, and facilitates more sustained credit flow in trade financing, said Ho Hern Shin, an assistant managing director at the Monetary Authority of Singapore.

Reuters first reported in July that banks are teaming up to strengthen lending practices and improve transparency in the sector.

The registry’s proof of concept is supported by Enterprise Singapore (ESG), a government agency that promotes trade, and endorsed by the main representative body of banks.

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, according to the statement.

Developed on a blockchain network supported by technology provider dltledgers, DBS and StanChart developed the proof of concept in three months with banks including ABN AMRO, ANZ, Deutsche Bank, OCBC and Rabobank.

The final form of such a trade finance registry should likely be subjected to some form of final selection and assessment by the relevant government authorities, said one banker who declined to be named as he was not authorised to speak to the media.

Important:

This article is for information purposes only.

Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.

There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.

Leave a Reply

4 × four =