Citi has developed an innovative application that uses blockchain infrastructure to price and execute bilateral spot foreign-exchange trades. The application is a part of Project Guardian, a collaborative initiative by the Monetary Authority of Singapore and the financial industry.
While the current phase of the application tested spot FX for the US dollar and the Singapore dollar, the underlying solution could be used for any fiat currency pair. The application is not currently available to clients.
Citi's on-chain solution provides real-time streaming of price quotes while recording trade executions on a blockchain, which supports the immutable, cryptographically secure record-keeping of trade data. At the same time, it allows for compliance and conformity with institutional practices and applicable regulatory requirements, with only counterparties to a quote or trade having access to the underlying trade details.
“We are taking steps towards building foundational capabilities to offer liquidity, pricing and risk management to our global clients wherever they choose to trade – be it on traditional rails or on blockchain,” says Sam Hewson, head of FX sales at Citi.
Shobhit Maini, co-head of digital assets for markets at Citi, adds: “While blockchains have demonstrated promise for streamlining post-trade processes, our objective is to drive improvement at all stages of the trade life cycle, including pre-trade and execution,” notes
Citi collaborated with T. Rowe Price Associates and Fidelity International on the FX application under the Project Guardian initiative.
Blue Macellari, head of digital asset strategy at T. Rowe Price Associates, notes that developing user-friendly institutional-grade solutions is key to future scalability, adding that the application is an important first step towards unlocking the value of a full, end-to-end, blockchain-based trading lifecycle.