Citi, in partnership with the Monetary Authority of Singapore (MAS) under Project Guardian, has introduced an innovative blockchain application for bilateral spot foreign-exchange (FX) trades. This initiative aims to explore the potential of distributed ledger technology (DLT) in revolutionizing financial processes while ensuring adherence to regulatory standards.
Streamlining FX Trades on the Blockchain:
Citi’s on-chain solution, developed as part of Project Guardian, leverages blockchain infrastructure to facilitate real-time streaming of price quotes and execute bilateral spot FX trades. The technology ensures the secure and immutable record-keeping of trade data, aligning with institutional practices and regulatory requirements.
Expanding Possibilities Beyond USD/SGD:
Although the initial testing phase focused on spot FX for USD/SGD, the underlying blockchain solution holds the potential for application with any fiat currency pair. Despite the current unavailability to clients, the development signifies a strategic move towards enhancing liquidity, pricing, and risk management for global clients.
Industry Collaboration for Institutional-Grade Execution:
Citi collaborated with T. Rowe Price Associates, Inc and Fidelity International to develop and test the application. Blue Macellari, Head of Digital Asset Strategy at T. Rowe Price Associates, Inc, emphasized the importance of user-friendly institutional-grade execution for future scalability. The collaboration underscores the industry’s collective effort to unlock the full potential of blockchain-based trading lifecycles.
Insights from Key Stakeholders:
- Sam Hewson, Head of FX Sales at Citi, expressed the institution’s commitment to building foundational capabilities, offering liquidity, pricing, and risk management on both traditional and blockchain platforms.
- Shobhit Maini, Co-Head of Digital Assets for Markets at Citi, highlighted the broader objective of driving improvements across the entire trade life cycle, encompassing pre-trade and execution stages.
- Blue Macellari emphasized the significance of the application as a crucial step towards realizing the value of a comprehensive end-to-end blockchain-based trading lifecycle.
- Emma Pecenicic, Head of Digital Propositions and Partnerships at Fidelity International, acknowledged the potential of distributed ledger technology in revolutionizing financial systems and expressed the institution’s eagerness to explore technological innovations for the benefit of investors.
Avalanche Blockchain Implementation:
The application’s current phase utilized a private permissioned instance of the Avalanche blockchain to capture price quotes and trade confirmations specific to each counterparty. This strategic choice reflects the commitment to leveraging advanced blockchain technologies for enhanced efficiency and security.
Project Guardian’s Vision:
Project Guardian, a collaborative initiative by the Monetary Authority of Singapore, aims to test the feasibility of applications in asset tokenization and decentralized finance (DeFi) while managing risks to financial stability and integrity. Citi’s participation underscores its dedication to exploring innovative solutions within a regulatory framework.
Conclusion:
Citi’s introduction of the Blockchain FX Solution, in collaboration with Project Guardian, marks a significant stride towards integrating blockchain technology into the FX trading landscape. The ongoing partnership with industry leaders and the strategic use of advanced blockchain platforms demonstrate a commitment to shaping the future of financial processes while ensuring regulatory compliance and institutional-grade execution.
