The national settlement Depository (NSD) and Rosselkhozbank plan to launch a pilot project on digitalization and tokenization of grain stocks of trading participants on the Moscow exchange by the end of the month.
“This should help to minimize the risks of incorrect accounting. In the future, the tokens will be sold on the spot market,” Eddie Astanin, Chairman of the NSD management Board, told reporters.
“Digitalization in cooperation with the Russian agricultural Bank will minimize the risks of incorrect grain accounting and simplify the trading technology. For example, if you want to buy half a car of grain, it immediately leads to a rise in price – you are forced to buy a car. Tokens, in turn, allow you to trade individual batches of grain. We hope to be able to launch this project before the end of this month. For us, it is a new digital asset, and for the industry, it is a way to get away from physical processes,” Astanin said on the sidelines of the presentation of the exchange’s development strategy until 2024.
Further, Astanin explained exactly how this system will work: for example, the client put one ton of grain in the warehouse, received a receipt that there is a ton, handed over the receipt to the RSHB, the Bank made sure that there is a receipt and there is grain, he informs NSD, a token is issued in the blockchain system.
“Millions of tons of grain – millions of specifications: where it is stored, what category, who passed it. And this token is unified, it can already be traded, including on the secondary market. And if someone bought this token, comes to this warehouse and presents the token, then they can get physical grain. After the grain is shipped, the token is destroyed,” the head of NSD added.
According to him, NSD is negotiating with VTB and UGC – “there is also a very powerful expertise there — precisely as part of a pilot project, how it could be built.” “We are now talking about the spot market, as we plan that the futures part will be covered by the NTB (National commodity exchange, part of the Moscow exchange), due to the fact that there is already a developed infrastructure there,” said Astanin.
At the end of April, the Moscow exchange reported that it faced cases of shortage of grain on swap transactions, presumably due to theft. The exchange filed an application for initiation of criminal cases on the facts of shortages.