Citi Debuts Blockchain Solution for Foreign Exchange Trades

Citi has created an application that uses blockchain to execute foreign exchange (FX) trades.

The new tool, announced Wednesday (Nov. 14), employs blockchain infrastructure to price and perform bilateral spot FX trades, and was developed for the Monetary Authority of Singapore’s (MAS) Project Guardian, a collaborative initiative by the MAS and the financial industry.

The application, thus far not available to clients, tested trades involving the U.S. dollar and Singapore’s dollar, though the underlying solution “could be used for any fiat currency pair,” Citi said in a news release. 

“Citi’s on-chain solution provides real-time streaming of price quotes while recording trade executions on a blockchain, which supports the immutable, cryptographically secure record-keeping of trade data,” the release said. 

“At the same time, allowing for compliance and conformity with institutional practices and where applicable regulatory requirements, with only counterparties to a quote or trade having access to the underlying trade details,” the release added. 

Shobhit Maini, Citi’s co-head of digital assets for markets, noted that although blockchains have shown promise in streamlining post-trade processes, the bank’s goal “is to drive improvement at all stages of the trade life cycle, including pre-trade and execution.” 

Citi worked with T. Rowe Price Associates and Fidelity International on the application, the release said.

“Developing user-friendly institutional grade execution is key to future scalability,” said Blue Macellari, head of digital asset strategy at T. Rowe Price. “This application is an important first step towards unlocking the value of a full end-to-end blockchain based trading lifecycle.”

Project Guardian follows another initiative the MAS took part in recently, dubbed Project Mariana. Working with the Bank for International Settlements (BIS) and central banks of Switzerland and France, the groups announced last month that they had completed a test of wholesale CBDCs (wCBDCs) — with a focus on FX.

In a paper detailing its findings, the BIS and the central banks stated that the benefits of CBDCs “include supporting simple and automated execution of FX transactions, providing options to broaden the range of currencies, eliminating settlement risk and enabling transparency.”

As noted here in October, PYMNTS Intelligence has shown that 27% of small- to medium-sized businesses (SMBs) view the complexity of cross-border payments as a roadblock to their ability to grow, while just 23% of SMBs said their current cross-border payment solutions were very or extremely satisfactory.

“That leaves three-quarters of respondents noting that the solutions they have in place fall short in terms of what they need to manage their business’ cross-market flows,” PYMNTS wrote.