COMDEX. The dawn of a new era
Much has been spoken about commodity trading and its apparent influence over the global economy. As with any industry, it needs to keep up with the advances in technology around it in advancing the industry as a whole. The commodity trading industry is no different. It relies on non-modern techniques to function and hence requires a modern solution.
Introducing Comdex, a platform comprised of several individual elements such as Trade Discovery platform, Trade settlement and trade financing with KYC/AML checks. Comdex aims to fix the fragmented commodity trade industry efficient, fast and transparent with a clear vision to revolutionize the rudimentary process of global commodity trade to minimize settlement times and maximize transparency, efficiency and immutability in trade discovery and trade financing at lightning speeds.
Problems faced by the commodity trade industry today:
- Lengthy Trade Cycles
- Scarcity of Real-time discovery platforms
- Falsification of crucial data
- No Ratings / Scoring system establishing the credibility of the traders
The problems are discussed at length in this blog about the state of the industry today.
Solutions Presented by Comdex
- Trade Discovery
The Comdex platform facilitates trade discovery by linking prospective commodity buyers to active ‘sell’ listings. Utilizing the reputation system of Comdex, traders can effectively conduct due-diligence on potentially new partners.
The Comdex settlement platform aggregates verified commodity ‘sell offers’ in a clear structure enabling a trader to make the best decision. Suppliers who initially go through AML/KYC checks will have to submit scans of ‘documents of trade’ using their Comdex trader account, these scans will then be reviewed by the regional Comdex office.
When the ‘sell listing’ request is authorized, the order is available on the public order-book if the seller does not already have a buyer planned in the pre-shipment phase.
All traders and suppliers on Comdex hold a reputation score which is calculated by feedback on their past trades. The participants of trade can connect with each other on the Comdex platform and make a decision regardless of any prior trade experience.
Trade discovery is more than just a marketplace for potential buyers and sellers. The trade discovery platform unique to Comdex captures the four main events in the life cycle of a trade and records it on the immutable ledger. These events are:
- Trade creation
- Trade confirmation
- Asset Confirmation
- Payment Confirmation
The unchangeable nature of the record keeping which is accessible only to the relevant parties serves as the source of authenticity.
2. Trade Settlements
The Comdex settlement system offers commodity traders the ability to make cross-border payments without the use of the SWIFT system which is expensive and time-consuming.
The Comdex settlement platform relies on the use of advanced Real-Time domestic settlement protocols that are present in the platform’s supported trading regions. The focus in the past several years in terms of blockchain based global remittance solutions has been largely focused on replacing the global interbank messaging architecture (SWIFT/IBAN).
Comdex acknowledges the complexity of communication between banking systems present in different regulatory jurisdictions and instead focuses on existing real-time payment networks present in the region of the commodity trader.
With the benefit of domestic RTGS (Real Time Gross Settlement) networks, traders on the Comdex platform are able to either withdraw funds from or deposit funds into the platform within hours.
The first 4 regions that Comdex focuses on in its pilot program each features a highly scalable and well developed domestic payment protocol involving dozens of partner banks.
- Singapore — FAST
- Hong Kong — FPS
- Malaysia — RENTAS
- UAE — UAEFTS
Each of these protocols facilitates real-time domestic settlement in a safe and secure manner and these payment systems process billions of dollars in volume per year. With the use of domestic settlement systems, traders on the Comdex platform are able to either instantly deposit / withdraw funds facilitating lightning fast settlements.
3. Trade Finance
The Comdex trade finance platform allows financial organizations to finance commodity trades that will be settled on the Comdex platform.
Some of the key features of the Comdex platform offer a very high magnitude of utility for trade financing organizations:
a. Deal Flow Visibility — Financiers will have access to viewing requests for trade financing from commodity traders present on the Comdex platform. Increased visibility of trustworthy requests will result in a growth in lending volume for trade financiers in the longer run, significantly making an impact on long-term profitability.
b. Transparency — Comdex is an end-to-end commodity trading platform which includes everything from trade-related document processing to the final settlement.
c. Due Diligence — A trade financier will be able to review all trade-related as well as corporate KYC data in order to conduct proper due-diligence before making a decision on whether to finance trade.
Relevant data points for due diligence include:
i. Trader’s corporate documents (registration, licenses etc.)
ii. Trade-related documents (Bill of Lading, COA etc.)
iii. Historical trade settlement and financing history
All transactions and data points on the Comdex platform are logged on the blockchain, offering absolute trust and assurance that there has been no alteration of any transaction history or data points (after the data has been added onto the platform)
4. KYC / AML checks on both ends
The Comdex Platform strives to reduce the risk present in a trade settlement by providing trade participants with up-to-date background verification information- fetched from the APIs of reputed datasets.
A wide range of background checks is conducted on the Comdex platform in-order to reduce any operational risks experienced by traders. In addition to the state of the art internal reputation system, these background checks ensure a base degree of trust and legal comfort that can be enjoyed by traders when establishing new partnerships in order to broaden their market reach.
These checks comprise:
- Sanction Checks: The Comdex platform integrates with ‘Sanction Check’ systems which highlight flagged ownership data, regions of origin, registered owners, beneficial owners and commercial operators
- Vessel Check: Vessel reputation, risk and geographical positioning data can all be accessed on the Comdex platform thanks to the integration of the Lloyds List APIs
- KYC/AML Check of Participants: Comdex platform integrates with world-check APIs to meet due-diligence obligations, including requirements under KYC/AML and CTF legislation. bribery and corruption customer and counterparty due diligence and screening.
5. Regional Offices
Comdex understands the legal and regulatory checks and as a result of that, the offices are strategically located in the major commodity trading hubs. These regional offices are tasked with various aspects of the settlement process. Such responsibilities include the management of the Original Bill of Lading, handling of domestic wire transfers and trade-related detailing.
As the primary point of focus for Comdex is the South-East Asian region, the offices have been spread across Dubai, Hong Kong, Kuala Lumpur and our headquarters, Singapore. The offices in different regions of the world will be added as Comdex continues to expand.
The ongoing Pilot Program
A significant moment in the history of commodity trade, Comdex successfully completed its pilot program involving multiple on-boarded partners. This has been recorded as one of the first-ever On-Chain Fiat Settlement in the history of commodity trading. The entire settlement process is through the Comdex blockchain.
Some of the facts and figures pertaining to our first few pilot programs are as such:
By the end of February 2019, settlement of close to $1 million was effected on the Comdex Platform.
Comdex is on track to complete close to $10 million by the end of June.
Comdex Blockchain Architecture
Built on the tenets of Tendermint, Comdex functions on a multi-chain model to provide an accelerated trading environment based on scalability, security and immutability.
Comdex uses a proprietary settlement platform built on the tenets of Tendermint, a protocol comprised of two main pieces:
A blockchain consensus engine
Generic application interface
Using Tendermint, Comdex scopes the validating of transactions where transactions of each commodity and zone will utilize validators and consensus of the Hub initially, but will eventually function in a way where every zone utilizes their own validator set for processing transactions on top of the respective chain.
Comdex works on a multi-chain model, enabling stakeholders to communicate and exchange value in an accelerated trading environment that’s backed by both the security of cryptography and the decentralized architecture of the developed blockchain.
The decentralized architecture of the platform features utilities and emergent properties, which in their implementation makes the process of trade settlement and finance much more agile, secure and robust.
About Comdex
A progressing industry needs a modern solution. Comdex is a platform aimed at revolutionising the fragmented commodity trade industry efficient, fast and transparent. The vision of Comdex is to revolutionise the rudimentary process of global commodity trade to minimise settlement times and maximise transparency, efficiency and immutability in trade discovery and trade financing at lightning speeds.
Find out more about what Comdex is doing to revolutionise the commodity trading industry at our official website.
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In the Press
Yahoo Finance: Comdex Announces the Successful Completion of a Settlement on Its New Platform
PR Newswire UK: Comdex’s pilot program
Business Insider: Comdex registers the first settlement on its platform
