Blockchain touted to become trading standard

Blockchain is coming to commodity markets, Blythe Masters told guests at the London Metal Exchange annual dinner during LME Week.

The virtual ledger technology underlying cryptocurrencies such as bitcoin promises greater confidentiality, fewer paper exchanges, better provenance and a boost in productivity, the former JPMorgan Chase executive said in a speech at the gathering on Tuesday night.

Masters, the wunderkind who was made MD at JPMorgan at the age of 28, went on to become head of global commodities and helped develop the credit-default swap. Now as the CEO of New York tech start-up Digital Asset Holdings, she is pitching blockchain as a way to revolutionise supply chains.

“Supply chains are notoriously complex and inefficient,” Masters said. “This is especially true in the metals and mining industry where many operational and commercial practices remain inefficient and antiquated, leading to critical data omissions, security vulnerabilities, expenses, corruption and unethical provenance.”

BLOCKCHAIN TECHNOLOGY HAS IMPLICATIONS FOR MARKETS, FROM MINING TO SHIPPING AND TRADING

The technology is finding a natural home in commodity markets, where it is seen as a means to track material through supply chains in gold, diamonds and oil.

Banks including Standard Chartered, which was ensnared by a scandal involving forged commodity-storage receipts, have said they are looking at the technology to address the risk of multiple-invoice fraud.

Masters addressed about 2,000 metals producers, buyers, brokers and investors at the LME dinner — a key event during the week-long industry gathering. Previous speakers have sometimes used the opportunity to rail against the encroachment of technology into the LME, where prices are still set via an open-outcry trading ring.

Blockchain has implications for markets, from mining to shipping and trading, Masters said. There are “tens if not hundreds” of projects under way, she said.

“Blockchain facilitates the exchange of critical trade documents, bills of lading, letters of credit between connected users securely and confidentially,” Masters said.

“Clearly the indications for metals mining, shipping, storage, and logistics industries are nontrivial.”