On 9 January, Qianhai Mercantile Exchange (QME) and Ant Financial/Ant Blockchain jointly held the launch ceremony of their blockchain warehouse warrant alliance, rolling out the technology-empowered warehouse warrants 2.0 ecosystem built by QME in collaboration with leading producers, processors, traders and end-consumer enterprises as well as warehouses, logistic companies, insurance companies and banks.  Attendees of the ceremony including Dong Feng (General Manager of QME), Li Jieli (General Manager of Ant Blockchain), Li Shen (Executive Vice President of Shenzhen FinTech Association), Pan Haihong (Secretary-general of Blockchain Application Subcommittee of China Federation of Logistics & Purchasing), Warren Wang (Managing Partner of blockchain business of Ernst & Young Greater China) as well as more than 30 other experts in finance, technology and industry fields.

Warehouse warrants are an important tool for the circulation of commodities.  The spot commodities assets in the Mainland have all along lacked protection for their authenticity, security and liquidity.  As most of the warehouse warrants are traded over the counter (OTC) and exist in non-standardised forms, they fail to meet the risk control requirements of financial institutions in relation to the various aspects of their circulation including trading, storage and settlement.

In light of the above situation, the blockchain warehouse warrant alliance project will leverage the blockchain technology to turn non-standardised spot commodities traditionally traded in the market into good-quality, safe, liquid and standardised short-term assets that can directly penetrate to the bottom layer, thereby helping SMEs and traders meet their financing needs.  Also, enterprises will be able to take advantage of this new warehouse warrant system to significantly increase their production turnover and capital utilisation efficiency, and to ensure supply to financial institutions of the underlying assets that can be securitised based on real economic and actual trade activities.

Dong Feng, General Manager of QME said, “Exchanges are a natural provider of market infrastructure.  By relying on blockchain technology, the traditional centralised enterprise-level warehouse warrant system based on the credibility of individual warehouses can be transformed and upgraded into a new decentralised one of an exchange established and administered collectively by many parties including enterprises in the industry chain, warehouses, traders, banks and insurance companies.  The exchange warehouse warrants endorsed by the multiple parties under this system will become standardised financial assets, thereby effectively solving the enterprises’ financing problems while practically serving and supporting the high-quality development of the real economy.”

QME will build a closed-loop “QME warehouse warrants 2.0 ecosystem” through the above blockchain warehouse warrant alliance, the Internet of Things (IoT) project and warehouse warrant insurance project which were launched in the early stage, so as to comprehensively supervise and protect the production, logistics and warehousing of commodities.  The IoT technology verifies the authenticity of the data linking process whereas the blockchain technology ensures that the linked data will not be tampered with maliciously, and commercial insurance covers tail risks.  This is of great significance for the building of a credible exchange warehouse warrant system and the formulation of new standards for the warehouse warrant industry.  As a commodities trading platform operated by HKEX in Mainland China, QME will be oriented towards providing practical application scenarios for emerging technologies with the goal of improving the financial infrastructure system.  With its effort to maintain sustainable development and innovation, it is hoped that it will give a strong boost to the development for the real economy.