Posted 3 years ago | by Ben Armstrong
HSBC Becomes First Bank to Secure Transaction via we.trade
Global bank HSBC has become the first to use we.trade, a Hyperledger-based platform, to secure a commercial transaction. The we.trade platform is designed to facilitate commercial trade in the EU, and is backed by some of the world's largest banks.
Global Trade Review (GTR) reported that HSBC used the we.trade platform to settle a trade between Beeswift, which is a Midlands-based (UK) manufacturer of protective equipment, and a Dutch company that was represented by Rabobank.
we.trade is a New Solution for Global Trade
Ian Tandy, who is the head of global trade and receivables finance for HSBC UK, told GTR that:
“We’ve done a number of transactions (with we.trade). It’s beta stage at the moment; it’s a pilot. This is the first transaction where we have had two buyers use the system end-to-end, including the ability to write the invoice, agree to trade terms, provide the BPU, and additionally receive funding off the back of that BPU.”
New Ideas in Trade Finance
The we.trade platform has a number of options for facilitating global trade, including access to a Bank Payment Undertaking (BPU), which HSBC describes as, “an online equivalent of a letter of credit (LC)” .
Letters of Credit (LC) are an archaic system of securing trade finance, and are being replaced by pilot blockchain based platforms, like we.trade. The we.trade platform has 12 shareholders at the moment.
The we.trade shareholders are CaixaBank, Erste Group, Deutsche Bank, HSBC, KBC, Natixis, Nordea, Rabobank, Santander, Société Générale, UBS and UniCredit. All of the we.trade shareholders have signed license agreements that should put the we.trade platform into real-world use in the near future.
Global Trade is an Important Market
By using we.trade the transaction time between UK-based Beeswift and it's Dutch counterparty was cut down from 10 to 12 days, to just 24 hours.
At the moment HSBC is offering the use of we.trade at zero cost to its clients, because the bank wants to develop the platform. A HSBC spokesperson commented that we.trade will make trade financing, “transparent and more intuitive”.
The we.trade platform may also drop the cost of trade finance, though HSBC would not comment on any possible changes in trade financing costs according to GTR.
The global trade in goods was estimated to be worth $16 trillion USD in 2016 by the United Nations Conference on Trade and Development (UNCTAD) in their “The Status of World Trade” report, which is an official publication of the United Nations (UN).
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