Live Trade Room
Cross border commodity trade involves the handling and exchange of documents of high value and importance, and therefore, requires a high degree of trust between the trading counterparts. This leads to a reluctance among traders to engage in business with new counterparts. The risks arising from engaging in trade with unverified counterparts can be mitigated by performing thorough KYC and background checks on the trading counterparts. However, the process of performing such checks usually takes up time and can be costly.
SMEs and MEs in emerging markets often lack the capital and access to produce the level of documentation & track-record that larger trading organizations have, and more importantly trade financiers seek in the trading parties. As a result, SMEs and MEs end up with limited access to the trade financing required to maintain trade flow along with working capital for business operations. The same hurdles lead to trade financiers having limited access to verified trades seeking financing, further adding to the problem of insufficient access to financing for traders.
Comdex performs thorough and automated KYC and AML checks on all the organizations on the platform. Comdex has access to industry-grade database tools like Refinitiv World-Check. All ongoing trades on the platform have to be cleared for several checks including vessel checks for settlement of the trade.
With fully automated integrations with the KYC partners, Comdex can perform thorough checks and ensure all trading partners on Comdex have been KYC'ed. Trade financiers on the Comdex platform too will be able to make better-informed business decisions with access to trade with verified trading parties and vessels.
Commodity traders across the globe are obliged to comply with various corporate and jurisdictional regulations when engaging in commodity trade. With existing trade workflows and details scattered across various communication channels, traders see a growing complexity in trade processes leading to an increased length of their trading cycles. Such a system of trade can also be a source of vulnerability to the security of the data. It is due to this very reason, commodity trading houses lack the ability to maintain organized data and reports on trades which can ultimately be used for auditing and performance tracking purposes.
The lack of standardization and organization in trade workflows also makes it harder for traders to seek financing for some trades. Financiers often have to rely on unverified scanned documents and email threads to have access to all trade-related information which is often not a reliable means of performing thorough due diligence.
Traders on Comdex can maintain and exchange key trade documents and information of their existing and ongoing trades, all of which are stored on the blockchain securely and immutably. The workflow on the platform facilitates structured information & document exchange, which enables counterparties to establish trust and auditability. Extensive reports of trade details can be generated and utilized by the trading parties for easy integration of trade details with their legacy corporate database systems. The reports can also be used for analysis and performance improvement.
Each trading organization has a certain set of corporate and jurisdictional regulations that bind their trading activities. Traders lack access to a single interface for communication and secure information exchange. As a result, traders end up relying on less-secure means of information exchange through third party emailing and chatting applications. The reliance on third parties to facilitate such an exchange is a major vulnerability in the trade process. Alternatively, traders must rely on face-to-face interactions to conduct negotiations and execute the contract, during which it becomes hard to maintain logs of all terms and negotiations during the trade.
The Live Trade Room is a module designed to enable trading parties to have the fastest ever trade negotiations, document exchange, and settlement (subject to the readiness and responsiveness of the trading parties).
With features like live chatbox, shared document viewing and exchange and e-signing, traders can complete all trade formalities frictionlessly with the assured security offered by the Persistence blockchain. The module aims to facilitate negotiations and exchanges with equal, if not faster, speed as face-to-face interactions with the added feature of auditable and immutable logs of all interactions. The trade room is also structured to ensure standard industry workflows can be maintained during the exchanges in the module.
The trade process is designed to minimize the risk of default from either party. Sellers and suppliers are protected from the risks of exposing trade documents without securing payment commitment to their trading counterparties. Buyers on the platform are protected from the risk of committing to pay without complete and thorough verification of all trade documents.
The trade settlement module, powered by WU® EDGE, allows traders to make cross-border settlements almost instantly without bearing high expense and settlement times that arise from using the SWIFT system. The module uses advanced real-time domestic settlement protocols present in the platform's supported regions.
Unlike fund remittances in retail banking, remittances in the physical commodities trade run into hundreds of thousands of dollars (even millions) and therefore require a higher degree of scrutiny and documentation. Due to the high risks involved, trading parties often engage banking intermediaries to act as escrow agents in the exchange of title documents for funds. In cross-border remittances for trade, the trading parties both engage banks as their local escrow agents. The banks, in turn, appoint a correspondence bank to establish trust in trade. This means that at each point of information exchange, the documents need to be verified by all the intermediaries as well as the trading parties involved. Such a method of verification and settlement severely slows down the trade cycles, which can lead to monetary losses culminating to billions of dollars globally.
Comdex's Settlement module is a revolutionary product that can achieve near-instant settlements for commodity trades. Buyers of commodities can make domestic telegraphic funds transfers to their respective digital WU® EDGE accounts. Once Comdex performs vessel check and can verify an ongoing trade with a signed contract, the blockchain validators update the Fiat Ledger and create the instruction from Comdex to the WU® EDGE settlement module to complete the payment. The trade is simply settled instantly as a domestic telegraphic transfer to the beneficiary.
One of the most common struggles in the global import-export financing industry is the lack of access to financing for SMEs and MEs, especially those from emerging market economies. Physical commodity trade is a highly fraud-prone industry due to substantial vulnerabilities in trade processes. Trade financiers must, therefore, establish exhaustive due-diligence checks on all the trades they consider for financing. There is a need for systems that can organize all verified trade details for financiers in a way where all the trader and trade details can be easily accessed.
On Comdex, insured trades and trades with digital Bills of Exchange from obligors can be listed by suppliers for financing. Trade financiers on the platform have access to a directory of verified trades between KYC'd trading parties requiring financing. The module is designed to assist financiers in assessing financing proposals considering all the risk factors involved in the trade.