State Street, Vanguard, and Symbiont Complete First Live Trade for FX Futures Contracts Via Blockchain
State Street has completed the process of calculating the margin for a live transaction of a 30-day foreign exchange forward contract through the use of Assembly, Symbiont’s distributed ledger technology.
In collaboration with Vanguard and Symbiont, State Street is actively exploring the application of blockchain technology to undertake margin processing for forward currency contracts and swaps, with the goal of automating the post-trade workflow, reducing significantly counterparty credit risk in the over the counter currency market.
Harnessing the benefits of blockchain technology, the futures market will eventually allow the underlying contracts to also be instantiated, signed, executed and documented on a single unalterable record, State Street says.
This will digitally secure transactions and allow for automation over their duration, he adds.
Deploying these contracts on distributed ledger (DLT) technology facilitates more frequent and automated assessments, while allowing network parties to move and settle collateral instantly, dramatically reducing counterparty risk and streamlining process for non-cleared futures contracts subject to a margin.
Nadine Chakar, Head of State Street Digital, said: “State Street Digital is incredibly happy to have collaborated with Vanguard and Symbiont on this monumental industry initiative to digitize the margin process around guaranteed currency futures that will reduce the challenges. operational efficiency of our customers through process automation and advanced technologies.
Warren Pennington, Head of Vanguard’s Investment Management Fintech Strategy Group, comments: “Harnessing cutting-edge DLT technology represents a giant leap in the structure of the forex market by reducing counterparty risk, automating counterparty risk. previously manual processes and mitigating potential disputes through standardized calculation processes. lower risk and increased speed will lead to lower costs and better results for investors. “