HSBC’s Blockchain Platform Cuts Forex Trade Settlement Costs by 25%

18. Feb 2019 Posted by Akolkar B on News

Last Thursday, February 14, Reuters published a report stating that using a blockchain-powered platform, the London-based banking giant HSBC has considerably reduced the costs of foreign exchange (forex) trade settlements by 25%.

HSBC’s chief operating officer for FX cash trading and risk management - Mark Williamson told Reuters that the “bank processes between 3,500 and 5,000 trades a day on its “FX Everywhere” system, settling trades worth $350 billion”.

While that everyone has been talking about the potential benefits of using blockchain technology to improvise the current banking systems, HSBC sets a precedence by showing a practical use-case of it. Since February 2018, HSBC has reportedly processed FX trades worth $250 billion on the blockchain-powered platform.

Considering the huge scale of this project, HSBC notes that the use of blockchain technology helps to bring “significant cost savings in the financial industry”. “We going at a pace now,” Williamson said. “We are able to demonstrate that this is not a one-off proof of concept or just one or two trades.”

Although the bank declined to comment on the overall trades settled through traditional processes, it said that those done using the blockchain-powered platform are just a small fraction of it.

HSBC uses a distributed but permission ledger for real-time payment co-ordination across its training hubs in Europe, America, and Asia Pacific. With billions of dollars in daily settlements, Williamson told that HSBCS is likely to have a significant portion of overall internal inflows done over its blockchain-based platform.

He added: “The more participants that you have joining the HSBC shared permissioned ledger and the ecosystem, the more efficient we’re going to become in providing services to our clients.”

When it comes to adopting the emerging blockchain technology, HSBC has always stayed at the forefront of the technological shift. Last year, in partnership with banking giant ING, HSBC facilitated a trade-finance deal for Cargill - a food and agricultural group, over the Corda blockchain network.

Later in November 2018, HSBC in partnership with 10 other banking giants launched a trade finance platform powered by the blockchain technology.