Exclusive: HSBC and Wells Fargo use blockchain to settle FX trades
Two of the world’s largest financial institutions, HSBC and Wells Fargo, are using blockchain technology to settle foreign currency trades.
HSBC and Wells Fargo will use distributed ledger technology (DLT) infrastructure provided by Baton Systems to increase settlement speed and efficiency.
The road to Web 3.0
“We think DLT is a good way to achieve better transparency for our audit trail of FX transactions as they go inter company and now as they go to Wells,” Mark Williamson, head of FX partnerships and propositions at HSBC told City PM “It’s a really efficient way for cross-border settlement.”
Both HSBC and Wells Fargo believe blockchain will play an increasingly important role in future digital trading systems.
“As we start to move towards Web 3.0, which is the movement of store of value and payments onto distributed ledger technology and blockchain solutions, then having that underlying backbone and rail is going to be even more important,” Williamson continued.
Williamson further revealed that HSBC is experimenting with tokenizing assets such as bonds and gold as well as helping governments to develop digital currencies backed by central banks.
“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,” he continued.
Wells Fargo and HSBC will be able to collaboratively settle FX trades bilaterally multiple times a day with settlement taking less than three minutes according to Baton Systems. The offering builds on HSBC’s FX Everywhere platform which has settled over three million intrabank trades worth over $2.5tn (£1.8tn) since going live in 2018.
Wells Fargo says
“We are pleased to announce that we will be utilizing blockchain technology for the first time in the settlement process of cross-border payments,” said Mark Jones, co-head of Macro at Wells Fargo Corporate & Investment Bank.
“We are extremely excited to be collaborating with HSBC on a project which places both organizations at the forefront of blockchain innovation. We believe this will be the first step of many utilizing transformative technology across our industry in the years ahead.”
With assets of $2.9tn at 30 September 2021, HSBC is one of the world’s largest banking and financial services organisations. Wells Fargo is a leading financial services company that has approximately $1.9tn in assets.
Read more: Crypto could give London a unique post-Brexit advantage says Hammond