Banks and tech firms apply blockchain to trade finance
- Apple (AAPL) Tops Q4 EPS by 2c; Issues Solid Outlook
- Wall Street slips on earnings; Apple falls late after results
- Chipotle Mexican Grill (CMG) Posts Q3 EPS of $0.27; Comps Miss Views; Additional Stock Buyback Approved
- Pandora (P) Misses Q3 EPS by 1c, Q4 Revenue Guidance Falls Short
- After-Hours Movers 10/25: (OGXI) (AKAM) (VRTX) Higher; (EW) (NUVA) (CMG) (AAPL) Lower (more...)
HSBC headquarters building is seen in Pudong financial district in Shanghai December 8, 2010. REUTERS/Carlos Barria/File Photo
Get access to the best calls on Wall Street with StreetInsider.com's Ratings Insider Elite. Get your Free Trial here.
LONDON/HONG KONG (Reuters) - An HSBC and Bank of America Merrill Lynch venture and financial technology firm R3 said separately on Wednesday that they had created ways of using blockchain technology to simplify trade finance processes.
The two banks said they had joined with the Infocomm Development Authority of Singapore to emulate a letter of credit (LOC) transaction. Letters of credit are one of the most widely used ways to reduce risk between importers and exporters, helping guarantee more than $2 trillion worth of transactions, but the process creates a large paper trail and is time consuming.
Meanwhile, R3 said more than 15 of its consortium member banks have also designed self-executing transaction agreements, known as smart contracts, on R3’s distributed ledger platform to process accounts receivable purchase transactions, known as invoice financing or factoring, and LOC transactions.
By putting the transaction on a distributed ledger, the importer and its bank, together with the exporter and its own bank, can see the data in real time.
Financial services companies around the world have been focusing on developing blockchain technology, with advocates saying it has the potential to save billions of dollars in costs and speed up transaction times. The technology, which underpins the digital currency bitcoin, creates a shared database in which participants can trace every transaction.
Discussions are underway with other banks, corporate clients and shipping companies to further develop the technology, which is in its early stages, said Vivek Ramachandran, global head of product for HSBC's trade finance business.
(Reporting by Elzio Barreto; Editing by Alexander Smith and Louise Heavens)
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- BofA/Merrill Lynch Downgrades Adaptimmune Therapeutics plc (ADAP) to Underperform
- American Midstream Partners (AMID), JP Energy Partners (JPEP) Enter ~$2B Merger Agreement
- Utah boy, 16, shot outside school, 14-year-old arrested: police
Create E-mail Alert Related CategoriesReuters
Related EntitiesMerrill Lynch, Bank of America, HSBC, Bitcoin
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!