The komgo blockchain platform for commodity trade finance has acquired Trafec, a multi-bank trade finance application, to further grow its network.
komgo, which went live at the end of 2018, is developing products to streamline the often paper-intensive commodity trade finance process, and it says the acquisition of Trafec provides it with “key building blocks to support that objective”.
The Trade Finance Exchange Console, Trafec, was developed by eGTSA, a company which falls under the Swiss Trading & Shipping Association (STSA), in collaboration with banks including Banque Cantonale de Genève (BCGE), BCP, BNP Paribas, Crédit Agricole, ING and Société Générale. It has been live since 2011 and has nine banks and just under 100 corporates in production as of December 2019.
Trafec provides a digital and secure communication channel, described by STSA as like a “black box”, between commodity traders and banks, enabling trading companies to issue and be advised online of trade finance instruments such as documentary credits, collections, guarantees and stock and release requests. Each message is encrypted automatically, with only the recipient able to decrypt it using their personal certificate.
The idea for the multi-bank platform was inspired by the growing need to standardise exchanges between banks and traders.
komgo CEO, Souleima Baddi says that “this acquisition will help us to quickly scale up our network of users in key geographical markets. We are also excited by the unique functionalities enabled by the new joint offering, which will answer to the needs of a wide-range of industry users.”
A spokesperson for komgo tells GTR that the acquisition was signed in December 2019.
“We have invested with our stakeholders over 10 years to make Trafec a high-quality platform that improves the efficiency of trade finance operations,” says Stéphane Graber, chairman of eGTSA. “We are therefore extremely pleased that this acquisition secures the future of our investments and the objectives we have been pursuing since the birth of Trafec.”
komgo was founded as an independent venture in August 2018 and its 15 shareholders include a mix of corporate and financial players: ABN Amro, BNP Paribas, Citi, Crédit Agricole, Gunvor, ING, Koch Supply & Trading, Macquarie, Mercuria, MUFG Bank, Natixis, Rabobank, Shell, SGS and Société Générale.
Its basis followed two trials carried out on ING’s Easy Trading Connect platform in energy and soft commodities trading in 2017 and early 2018.
After the platform went live in the latter half of 2018, komgo released two new products in June 2019. In addition to the existing letter of credit (LC) product and KYC module, the platform added standby letters of credit and receivables discounting to its offering.
By leveraging blockchain technology, komgo aims to change the way financiers transact with clients and other relevant parties, speeding up the time taken to process deals and also enabling users to easily monitor a transaction’s progress in real-time.