Wells Fargo & Company WFC and HSBC Bank plc have come together to use a blockchain-based solution for the netting and settlement of matched foreign exchange (FX) transactions, reports Nasdaq.com. The development is Wells Fargo’s debut in utilising blockchain technology for the settlement process of cross-border payments.
Both companies will share a settlement ledger to process US dollar, Canadian dollar, British pound sterling and Euro transactions, says the article. The companies also plan to expand the platform to settle additional currencies in the near term. The companies expect to add more participants and introduce a central Financial Market Infrastructure (FMI) provider for platform rulebook administration.
Leveraging blockchain technology, the solution offers both banks ongoing real-time transparency of settlement status for matched FX transactions in the relevant currencies, says Nasdaq.com. By using Payment-vs-Payment (PvP) settlement, netting will be executed efficiently, reducing settlement risks and costs related to the processing of FX transactions.
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