The platform's shareholders are hoping that Contour can unify innovation in trade finance.
Contour, the Blockchain trade finance initiative owned by eight major banks: Bangkok Bank, BNP Paribas, CTBC, HSBC, ING, Standard Chartered, SEB and Citi, has officially left its beta phase.
GT Review (GTR) reported that the platform, which was previously known as Voltron or Letter of Credit (LoC) blockchain, is said to act as a DLT-based global network for trade finance.
However, according to GTR, this 'race to bring trade finance into the digital age' has caused the formation of a number of fragmented platforms into the trade finance space.
This resulted in some concerns: many in the industry expressed worries that no single platform would reach the critical mass necessary to be truly transformative, or even truly functional, for the industry as a whole.
The ability to gain widespread adoption in the trade finance industry is what Contour’s shareholder banks are betting on.
“I am struggling to think of another platform that has got so many banks onboard across different corridors and clients that have already undertaken live transactions and seen the value from it,” said Vinay Mendonca, global head of product, propositions and structuring, trade and receivables finance at member bank HSBC, to GTR.
“So, for us, there is the necessary catchment and foundation to drive scale.”
Mendonca also commented that HSBC now plans to move all of its regular documentary credit clients onto the network, and is asking its financial institution clients to join the platform as well, particularly in large markets such as India, Bangladesh, and Vietnam.
The Journey to Beta and Beyond
After launching as a prototype application on R3’s Corda in 2017, the platform premiered at Sibos in Sydney before undergoing testing by 80 banks and corporates, with trials in 17 countries across a number of industries. Contour gained status as a standalone legal entity at the beginning of this year.
Carl Wegner, CEO of Contour, told GTR that the testing process was a key part of the move out of its beta phase: “every time we did a transaction, we carried out a review, and we have been taking on all those inputs and learning from them,” he said.
Addressing Legal Challenges
However, there have been challenges along the way: “with banks and corporates initially using Contour to manage the letter of credit (LC) process, one of the key areas of work has been around the legal framework,” Wegner said.
This is particularly true because “although it is technologically possible to execute transactions using negotiable instruments registered via blockchain technology, in many jurisdictions these [transactions] are recognised only if they are on paper and signed, hindering the advancement of many digitisation initiatives.”
To tackle these legal challenges, Contour’s members and pilot testers have developed a rulebook and membership agreement that will be included with the project’s launch.
Wegner described the rulebook as “robust, but as simple as possible.”
Indeed, HSBC’s Vinay Mendonca told GTR that “the rulebook is really important.
“Rather than having to string together four or five different legal agreements between buyer, seller, buyer’s banks and seller’s banks, which was very onerous, [the rulebook] makes it very easy for everybody to sign up and know what their roles and responsibilities are.”
Mendonca also said that the rulebook was developed in line with ICC Uniform Customs and Practices (UCP) that are used for documentary credits.
Contour, the Blockchain trade finance initiative owned by eight major banks: Bangkok Bank, BNP Paribas, CTBC, HSBC, ING, Standard Chartered, SEB and Citi, has officially left its beta phase.
GT Review (GTR) reported that the platform, which was previously known as Voltron or Letter of Credit (LoC) blockchain, is said to act as a DLT-based global network for trade finance.
However, according to GTR, this 'race to bring trade finance into the digital age' has caused the formation of a number of fragmented platforms into the trade finance space.
This resulted in some concerns: many in the industry expressed worries that no single platform would reach the critical mass necessary to be truly transformative, or even truly functional, for the industry as a whole.
The ability to gain widespread adoption in the trade finance industry is what Contour’s shareholder banks are betting on.
“I am struggling to think of another platform that has got so many banks onboard across different corridors and clients that have already undertaken live transactions and seen the value from it,” said Vinay Mendonca, global head of product, propositions and structuring, trade and receivables finance at member bank HSBC, to GTR.
“So, for us, there is the necessary catchment and foundation to drive scale.”
Mendonca also commented that HSBC now plans to move all of its regular documentary credit clients onto the network, and is asking its financial institution clients to join the platform as well, particularly in large markets such as India, Bangladesh, and Vietnam.
The Journey to Beta and Beyond
After launching as a prototype application on R3’s Corda in 2017, the platform premiered at Sibos in Sydney before undergoing testing by 80 banks and corporates, with trials in 17 countries across a number of industries. Contour gained status as a standalone legal entity at the beginning of this year.
Carl Wegner, CEO of Contour, told GTR that the testing process was a key part of the move out of its beta phase: “every time we did a transaction, we carried out a review, and we have been taking on all those inputs and learning from them,” he said.
Addressing Legal Challenges
However, there have been challenges along the way: “with banks and corporates initially using Contour to manage the letter of credit (LC) process, one of the key areas of work has been around the legal framework,” Wegner said.
This is particularly true because “although it is technologically possible to execute transactions using negotiable instruments registered via blockchain technology, in many jurisdictions these [transactions] are recognised only if they are on paper and signed, hindering the advancement of many digitisation initiatives.”
To tackle these legal challenges, Contour’s members and pilot testers have developed a rulebook and membership agreement that will be included with the project’s launch.
Wegner described the rulebook as “robust, but as simple as possible.”
Indeed, HSBC’s Vinay Mendonca told GTR that “the rulebook is really important.
“Rather than having to string together four or five different legal agreements between buyer, seller, buyer’s banks and seller’s banks, which was very onerous, [the rulebook] makes it very easy for everybody to sign up and know what their roles and responsibilities are.”
Mendonca also said that the rulebook was developed in line with ICC Uniform Customs and Practices (UCP) that are used for documentary credits.
Rachel is a self-taught crypto geek and a passionate writer. She believes in the power that the written word has to educate, connect and empower individuals to make positive and powerful financial choices. She is the Podcast Host and a Cryptocurrency Editor at Finance Magnates.
Breaking: Binance's Changpeng Zhao Handed Four Months in Prison
Network, Learn, Grow | FMAS:24
Network, Learn, Grow | FMAS:24
Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
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Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
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Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
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Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Looking to expand your network in #Africa?
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20-22 MAY 2024
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#fmas #fmas24 #fmevents #networking #finance #africa
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
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Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
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