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ICAP test proves potential of blockchain in FX bilateral block trades

2 min read

Modern Money

ICAP has announced the successful completion of a proof-of-technology test of a distributed ledger using blockchain. The technology could potentially be a game-changer for trading operations while maintaining the capability of meeting current, stringent regulatory standards, according to the company. The test was completed on Feb. 26 by ICAP’s Post Trade Risk and Information unit, but the news was announced on the first day of the 41st Annual International Futures Industry Conference in Boca Raton, Fla..

Blockchain could bring huge advances for all manner of market uses, but the full potential of the technology will take years to manifest itself, one executive who was involved in the test explained on the sidelines of the FIA conference. Nevertheless, the test mark a significant milepost in blockchain implementation.

The test relied on underlying blockchain infrastructure from Axoni and the multi-asset matching and messaging network of Harmony. Axoni’s blockchain implementation is unique, according to the company, offering complex automation functions, transparency and enough bandwidth to handle high trade volume.

The test used spot/forward forex block trades that were bilaterally executed, with ICAP importing matched messages from Harmony’s network and converting then to blockchain-based contracts in real time. These contracts were then dirtsibuted across nine nodes where the transactions received clearance for supplemental services, including valuation, reporting and compression.

ICAP’s information and post-trade risk mitigation services include matching counterparties in forex, interest rate, credit, commodities, derivatives and emerging markets. The company’s PTRI division focusing on finding efficiencies and reducing operational risk for users.

Axoni is a provider of distributed ledger infrastructure, including blockchain deployments, the development of smart contracts, management of big data, analytics and connectivity products.