Vanguard – together with Franklin Templeton, BNY Mellon and State Street and tech provider Symbiont – has completed a proof-of-concept where blockchain-style technology took manual intervention out of servicing multiple 30-day foreign-exchange forward contracts.
In the words of Symbiont’s press release, the simulated contract management is “a proof of concept that is reflective of how the firms would conduct the first test trades of FX forwards on a DLT network in the future”.
The existing FX forwards market is described as largely manual, something that blockchain technology could potentially come to grips with.
“It will also give parties in the network the ability to value, move and settle collateral instantaneously—reducing the risk of payment delays and streamlining processes for those forwards that are non-cleared and subject to margining,” the Symbiont press release claims.
Warren Pennington, principal and head of Vanguard’s Investment Management FinTech Strategies Group, comments:
“The current environment emphasizes the need to streamline, automate, and secure critical business processes. When procedures are highly reliant on manual intervention and disconnected operations, it makes the markets vulnerable to disruption from crises and even simple manual mistakes.”
(Illustration: MW / Pixabay)