Asian Development Bank and R3 team for cross-border securities transaction system
Blockchain specialist R3 has joined forces with Asian Development Bank (ADB) to build a proof-of-concept for a cross-border multi-currency securities settlement system based on distributed ledger technology (DLT) in Asia Pacific.
The project will facilitate discussions in the Cross-Border Settlement Infrastructure Forum (CSIF) of the Asian Bond Markets Initiative (ABMI). ABMI comprises central banks and central securities depositories (CSDs) from across the Association of Southeast Asian Nations (ASEAN) and the Republic of China, Japan, and the Republic of Korea – collectively known as ASEAN+3.
Cross-border securities transactions in the ASEAN+3 region are currently processed through a global network of custodians and correspondent banks, which go through global centres in either the US or Europe. As a result, intraregional transaction settlements in ASEAN+3 take at least two days due to time differences as well as varying operating hours for markets within the same time-zone.
Directly connecting the institutions within a blockchain network could reduce both transaction costs and settlement risks, including the possibility that securities are not exchanged within an agreed timeframe, R3 explains.
“Cross-border settlement systems are notoriously complex and are plagued with inefficiencies that result in high fees, limited transparency, and delayed settlement times,” comments Amit Ghosh, chief information and services officer at R3.
“In an arena where high-value transactions are moving across regulated markets through multiple parties and processes, trust is paramount and interoperability is nevermore critical.”
The project will be carried out in two phases: a designing phase, to be completed by the end of March 2022, and a prototyping phase, scheduled for the second quarter of 2022.
In addition, R3 will work with other project participants (which also include various blockchain companies) to examine systems interoperability and the viability of central bank digital currencies (CBDCs) in Asia Pacific.
R3 is a well-established player in the DLT space with its flagship Corda offering – an enterprise-grade blockchain platform.
It says it maintains one of the largest DLT production ecosystems in the world, connecting over 400 institutions including global systems integrators, cloud providers, technology firms, software vendors, corporates, regulators, and financial institutions.
“Multi-party solutions developed on our platforms harness the ‘Power of 3’ – R3’s trust technology, connected networks, and regulated markets expertise – to drive market innovation and improve processes in banking, capital markets, global trade, and insurance,” the vendor explains.