The deployment of blockchain technology to streamline foreign exchange post-trade confirmation and matching has moved a step closer with the replication of an FX forward trade conducted by Commerzbank on behalf of thyssenkrupp across R3 Corda.
The EUR/PLN FX Forward deal, which amounted to EUR500,000 with a one month tenor, was initiated by thyssenkrupp using FX Live Trader, Commerzbank’s flagship currency trading platform. The deal confirmation was sent to thyssenkrupp directly via Corda, the distributed ledger designed by the R3 blockchain consortium.
Notwithstanding the regulatory and legal hurdles required for a live commercial roll out, the deal demonstrated the efficiency gains possible for bank back offices by eliminating the need for transaction reconciliation and third party confirmation and matching engines. For corporate treasurers, a more streamlined FX transaction process and a real time confirmation opens up the opportunity for insights into real-time liquidity positions
Nikolaus Giesbert, divisional board member, fixed income, currencies & commodities and trade finance & cash management, Commerzbank, says: “Reconciliation is a major issue for banks when trading FX. Significant resources are dedicated to resolving the issues that occur during the matching process. This deal demonstrates how the use of distributed ledger can transform and digitalise the processes in this space."