HSBC and Wells Fargo Use Blockchain to Settle Forex Trades

HSBC and Wells Fargo have begun using a blockchain platform to settle bilateral foreign currency (FX) trades in the latest sign of how technology which underpins crypto assets is spreading to more mainstream activities. According to a story in Reuters news, the world’s first interbank Payment vs Payment (PvP) settlement outside of CLS has been completed by HSBC and Wells Fargo using Baton Systems’ Core-FX solution, built on Baton’s distributed ledger technology (DLT). Baton’s PvP solution gives market participants direct control of their settlement cycles and streamline workflows for improvements to their liquidity, funding, risk and credit management — all on a PvP basis — reducing settlement risks and FX processing costs. The transaction marks the inception of a profound change in FX settlements, says Baton Systems, as all market participants now have the opportunity to radically reduce their settlement exposure and associated risks outside of the CLS framework. The transaction means all currencies, including emerging market currencies, which are ineligible for PvP settlement in CLS, can now be securely settled using DLT.