eTradeConnect
With the facilitation of the Hong Kong Monetary Authority, HKICL and seven major banks in Hong Kong implemented eTradeConnect, a trade finance platform, using distributed ledger technology (DLT) to provide digitalised trade finance services to both local and overseas participants. eTradeConnect commenced operation on 27 September 2018.
Company Profile
Established in February 2018, the Hong Kong Trade Finance Platform Company Limited (HKTFPCL) is a wholly-owned subsidiary of HKICL Technology Solutions Limited (HTSL) under the HKICL Group. It is a single-purpose company set up to act as the administrator of eTradeConnect.
Introduction of eTradeConnect
Trade finance, as an integral part of the local and global trading systems, has been paper-based as long as trade existed. Automation or digitalisation of the trade finance processes has proved to be difficult because multiple parties and banks in different jurisdictions are involved in a single trade transaction. However, the emergence of DLT has made the move into the digital era possible. Following the success of the proof-of-concept project on the use of DLT to build a trade finance platform in Hong Kong in 2016, eTradeConnect has been developed using DLT to replace the inefficient paper-based trade finance system. Tapping the immutable, transparent and traceable nature of DLT, trade-related documents can be digitised and stored in the platform for transmission and distribution among trade ecosystem participants, including buyers, sellers, import and export banks and logistics service providers, etc., in a secure manner.
eTradeConnect can not only help move the formerly heavily paper-based trade finance system into the digital era but also achieve various advantages. These include (i) sharing of trade finance documents among participants on a real-time and "need-to-know" basis to protect the privacy and security of data; (ii) enhancement of transparency of transactions as these operate on an open account basis so that the trading terms of a purchase order are more visible to all the relevant participants; (iii) lowering of the risk of fraudulent financing as trade data stored in the platform can be verified and cross-checked; (iv) reduction of the risk of duplicate financing to encourage banks to provide trade loans; and (v) standardisation and digitisation of trade documents help reduce reconciliation efforts and human errors.