HKEX’s Qianhai Mercantile Exchange will use blockchain tech from Ant Financial to provide verifiable warehouse receipts which will help commodities businesses to obtain financing.

Shenzhen-based QME (Qianhai Mercantile Exchange) and Ant Financial have launched a blockchain-based warehouse receipt alliance.

Under the alliance, QME will leverage Ant Financial’s blockchain technology to provide verification of warehouse deposits to facilitate financing for SMEs in the commodities industry.

SMEs holding a warehousing receipt can use it as collateral for financing, but fraudulent documentation and non-standardised warehousing receipts have been problems for lenders in recent years.

According to a QME statement, the project with Ant Financial will use blockchain to transform traditionally non-standard warehousing receipts into high-quality, safe and standardised short-term assets that can help solve SMEs’ financing problems.

“Under this system, exchange warehouse receipts endorsed by all nodes will become financial-grade standardised assets,” said QME general  manager Dong Feng.

The new system will enable businesses to deliver to financial institutions underlying tokenised assets based on real economic activity and trading background, helping to boost production turnover and capital efficiency.

QME is a mainland commodities platform launched in October 2018 by HKEX (Hong Kong Exchanges and Clearing), after it failed to make headway pursuing warehousing in China for the LME (London Metal Exchange).

Last May, HKEX was said to be in talks with Guangdong authorities on metals warehousing seeking to connect LME’s network of more than 500 warehouses with a warehouse based in China, the world’s largest consumer of metals.

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