Some of Wall Street's biggest names, including Goldman Sachs and JP Morgan, have completed a pilot that used blockchain smart contracts to manage equity swap transactions and post-trade lifecycle events.
The months-long pilot, which came after an initial proof-of-concept, was managed by DLT startup Axoni, using its AxCore platform, and included swaps market participants including BNP Paribas, Citi, Credit Suisse, Canada Pension Investment Board, IHS Markit and Thomson Reuters.
The project saw participants process equity swap lifecycle events, end-to-end, testing automated lifecycle management and synchronisation of single stock and portfolio total return swaps, as well as critical components regarding the deployment and management of the distributed ledger network.
The testing included a set of over 70 structured test cases to assess lifecycle functionality and integration with external systems, including IHS Markit’s SwapOne platform. Thomson Reuters' pricing and reference data was integrated into the system.
Axoni says that having both sides of a swap transaction on the same ledger allows counterparties to simultaneously view and share data during the entire lifecycle of the swap - from proposal to termination.
This synchronisation of data, increased transparency of calculation logic, and automation of corporate actions processing will reduce operational costs and errors and allow real-time data access for both client and regulatory reporting, says the firm.
Adam Herrmann, global head, prime finance, Citi, says: "Citi is pleased with the results of another successful equity swap pilot with Axoni. The contribution from investment managers to this effort signifies AxCore’s potential to add value end-to-end. Fewer valuation disputes, less reconciliation and real-time access to data would benefit all of the industry.”