HSBC and Wells Fargo have agreed to use a blockchain-based solution for the netting and settlement of matched foreign exchange (FX) transactions.
The Payment-vs-Payment (PvP) settlement netting solution platform runs on Baton Systems’ blockchain-inspired proprietary CORE distributed ledger technology and is governed by the Baton rulebook.
The tech provider said the platform enables participants to efficiently settle bilateral cross border obligations across multiple onshore and offshore currencies, coupled with the added flexibility of extended settlement windows to optimize PvP risk reduction.
Through the agreement, Wells Fargo and HSBC will jointly use the shared settlement ledger to process US dollar, Canadian dollar, British pound sterling and Euro transactions with plans to extend the platform to settle additional currencies in the near future.
The banks will be able to net bilateral payment obligations and settle on a pre-agreed cadence multiple times per day within the flexibility of the settlement windows enabled by this technology.
The offering builds on HSBC’s FX Everywhere platform which has settled over three million intrabank trades worth over $2.5tn since going live in 2018.
Mark Williamson, global head of FX partnerships & propositions at HSBC said: “As financial services continue to digitize the store of payment and value on blockchain, we are delighted to work with Wells Fargo in the adoption of this important cross-border digital backbone for the confirmation and settlement of Foreign Exchange trades.
“We are excited to continue to grow the FX Everywhere network whilst ensuring that we are well placed to transact in new forms of regulated digital currencies such as Central Bank Digital Currencies.”
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