Market operator ICAP will begin processing foreign exchange trades on blockchain in March. It will allow customers to track and value deals in the $1.7 trillion-a-day spot market.
So, the London group, to be renamed NEX Group from January, will supply the code to customers in March. So institutional investors can more transparently track and value deals in the spot market, which trades $1.7tn a day.
At the same time Euroclear, one of the world’s largest settlement houses, and its partner Paxos, a US financial technology group, have completed a 2-week blockchain pilot for more than 600 test deals in the London bullion market.
The projects mark further significant steps in the advance on markets of blockchain technology. Blockchain is an electronic ledger with records stored in “blocks”. Blockchain technology aims to automate the complex networks of trust and verification on which modern finance sits.
It has to be noted that banks see the technology as a way to cut costly back office systems. Furthermore, it will unify their data to meet rising demands on trade reporting and customers’ portfolio valuations.
ICAP, in conjunction with US technology group Axoni, will utilise its Traiana subsidiary. Traiana acts as a messaging hub for $2tn of forex, fixed income and swaps deals. It is set to become a key part of NEX. It sheds the brokers that built ICAP and focuses on digital market infrastructure.
Traiana reconciles transaction, reference, market and portfolio data before it is sent out, either to regulators, clearing houses or back to financial institutions themselves. In blockchain trading, data acts as a “genesis block”. Then, the encrypted details are passed to other parties for deciphering and verification.
Source: Financial Times (tiered subscription model) (12 Dec.)
