State Street, Vanguard and Symbiont complete first live trading in currency futures contracts via blockchain
State Street has completed the margin calculation process for a live trade of a 30-day forward foreign exchange contract using Assembly, Symbiont’s distributed ledger technology.
In partnership with Vanguard and Symbiont, State Street has been actively exploring the use of blockchain technology to perform margin processing on currency forwards and swaps, with the aim of automating the post-trade workflow and significantly increasing the credit risk of counterparties abroad to reduce. Foreign exchange market at the counter.
Eventually, by taking advantage of blockchain technology, the futures market will allow the underlying contracts to be instantiated, signed, executed, and documented even in a single immutable record, State Street says.
This will secure the business digitally and enable automation over its duration, it continues.
The use of these contracts on Distributed Ledger Technology (DLT) enables more frequent and automated valuations and enables the parties in the network to move and settle collateral immediately.
Nadine Chakar, Head of State Street Digital, says: “State Street Digital is delighted to be working with Vanguard and Symbiont on this monumental industry initiative to digitize the margining process around secured currency futures contracts that address the operational challenges of our customers through process automation and state-of-the-art Technologies. “
Warren Pennington, Head of Vanguard’s Investment Management Fintech Strategy Group, comments: “Using the latest DLT represents a giant leap forward in the structure of the foreign exchange market by reducing counterparty risk, automating previously manual processes and mitigating potential disputes through standardized calculation processes Lower risk and higher speed will result in lower costs and improved results for investors. “
