HSBC and Wells Fargo launch blockchain-based FX settlement solution
HSBC and Wells Fargo will settle foreign exchange (FX) transactions through a blockchain-based solution.
The bilateral agreement will see the banks use a shared settlement ledger to process US and Canadian dollars, British pound sterling and Euro transactions.
The blockchain tech reduces settlement risk and will provide real-time transparency of settlement status for matched FX transactions.
The shared, private ledger enhances settlement speed and efficiency by using blockchain technology, applied under the framework of an agreed rulebook, to optimise Payment-vs-Payment (PvP) netting opportunities between HSBC and Wells Fargo.
The offering builds on HSBC’s FX Everywhere platform which has settled over three million intrabank trades worth over $2.5 trillion since going live in 2018.
HSBC’s global head of FX partnerships and propositions, Mark Williamson, says growing the FX Everywhere network ensures the bank is well-placed to transact in new forms of regulated digital currencies such as central bank digital currencies (CBDC).
The platform runs on Baton Systems’ blockchain inspired proprietary CORE distributed ledger technology and is governed by the Baton rulebook.
Wells Fargo’s depth of US dollar liquidity and strong presence in the Americas complements HSBC’s strength in Europe and Asia’s emerging markets, the multinationals add.
Williamson describes the initiative as an “important cross-border digital backbone for the confirmation and settlement of FX trades”.
Mark Jones, co-head at Macro, Wells Fargo Corporate & Investment Bank, says this is the first time the bank is using blockchain technology in the settlement process of cross-border payments.
“We believe this [partnership] will be the first step of many utilising transformative technology across our industry in the years ahead,” he adds.