Citi has developed a new solution that uses blockchain infrastructure to price and execute bilateral spot FX trades. The application was created as a part of Project Guardian, an initiative launched by the Monetary Authority of Singapore (MAS) in collaboration with the financial industry to test the feasibility of applications in asset tokenisation and decentralised finance (DeFi) while managing financial risks.
Although the current phase was tested for spot FX for USD and SGD, Citi claims in a press release that the underlying solution is expected to work for any fiat currency pair.
The application provides real-time streaming of price quotes while recording trade executions on a blockchain that is “immutable and cryptographically secure”. Only counterparties to a quote or trade will have access to the trade’s underlying details. In addition, the request for streaming (RFS) function “explores the use of oracles for bilateral messaging and would enable best execution analysis through real-time post-trade analysis on a single platform”.
Sam Hewson, head of FX sales at Citi, said that the solution is a step 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”.