HSBC and Wells Fargo expand blockchain FX settlement solution to offshore CNH
18 November 2022 China
Image: Gina Sanders
HSBC and Wells Fargo & Company (Wells Fargo) are expanding their blockchain-based solution to enable the settlement of offshore Yuan (CNH). The solution is used for bilateral foreign exchange (FX) settlements.
The offshore Yuan is the fifth currency to be settled between the two banks using a shared settlement ledger that currently encompasses the US dollar, Canadian dollar, British pound and the Euro.
The shared, private ledger is managed by joint operations teams at HSBC and Wells Fargo with full visibility by each of the parties to the relevant FX settlement, along with shared FX transaction records.
The platform is governed under the framework of an agreed rulebook and facilitates netting and settlement of FX transactions between HSBC and Wells Fargo.
Since launching the shared distributed ledger solution in December 2021, HSBC and Wells Fargo have settled over US$200 billion in transactions, and plan to add additional currencies over the coming months.
The platform runs on Baton Systems’ proprietary CORE distributed ledger technology and enables participants to settle bilateral cross-border obligations across multiple onshore and offshore currencies.
It also offers extended settlement windows to optimise payment versus payment (PvP) risk reduction opportunities.
Mark Williamson, global head of FX partnerships and propositions at HSBC, says: “Extending CNH PvP settlement to Wells Fargo is an important milestone for reducing Herstatt Risk outside G10 currencies. This development is only our first step in extending our coverage into emerging markets currencies.”
Vince Hindman, global head of rates and FX solutions at Wells Fargo Corporate & Investment Bank, comments: “We are pleased to expand the capabilities of the platform to include CNH, allowing us to reduce risk in the payment settlement process. The collaboration shows that we can pursue innovative technologies and apply them in a way that enhances our existing infrastructure and ultimately benefits our clients.”
Arjun Jayaram, CEO and founder of Baton Systems, adds: “Today’s announcement marks a historic breakthrough. The addition of CNH demonstrates the ease and speed that PvP access can be extended across currencies, empowering firms to radically reduce settlement risk exposure fast. Whilst today’s announcement is a remarkable achievement, it is just the beginning.”
The offshore Yuan is the fifth currency to be settled between the two banks using a shared settlement ledger that currently encompasses the US dollar, Canadian dollar, British pound and the Euro.
The shared, private ledger is managed by joint operations teams at HSBC and Wells Fargo with full visibility by each of the parties to the relevant FX settlement, along with shared FX transaction records.
The platform is governed under the framework of an agreed rulebook and facilitates netting and settlement of FX transactions between HSBC and Wells Fargo.
Since launching the shared distributed ledger solution in December 2021, HSBC and Wells Fargo have settled over US$200 billion in transactions, and plan to add additional currencies over the coming months.
The platform runs on Baton Systems’ proprietary CORE distributed ledger technology and enables participants to settle bilateral cross-border obligations across multiple onshore and offshore currencies.
It also offers extended settlement windows to optimise payment versus payment (PvP) risk reduction opportunities.
Mark Williamson, global head of FX partnerships and propositions at HSBC, says: “Extending CNH PvP settlement to Wells Fargo is an important milestone for reducing Herstatt Risk outside G10 currencies. This development is only our first step in extending our coverage into emerging markets currencies.”
Vince Hindman, global head of rates and FX solutions at Wells Fargo Corporate & Investment Bank, comments: “We are pleased to expand the capabilities of the platform to include CNH, allowing us to reduce risk in the payment settlement process. The collaboration shows that we can pursue innovative technologies and apply them in a way that enhances our existing infrastructure and ultimately benefits our clients.”
Arjun Jayaram, CEO and founder of Baton Systems, adds: “Today’s announcement marks a historic breakthrough. The addition of CNH demonstrates the ease and speed that PvP access can be extended across currencies, empowering firms to radically reduce settlement risk exposure fast. Whilst today’s announcement is a remarkable achievement, it is just the beginning.”
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