HSBC has settled $250 billion worth of FX transactions using distributed ledger technology

HSBC has settled $250 billion worth of FX transactions using distributed ledger technology.

In a press release, HSBC stated they have “settled more than three million FX transactions and made more than 150,000 payments worth $250 billion using distributed ledger technology (DLT).”

They have dubbed this DLT solution ‘HSBC FX Everywhere,’ and it has been implemented for the past year. By using DLT, they have orchestrated payments across their internal balance sheets and created “significant efficiencies and opportunities.”

An FX transaction refers to a transaction conducted on a foreign exchange market. This market determines the foreign exchange rate, including all aspects of buying, selling, and exchanging.

The press release details how a shared permission ledger has transformed the process around “intra-company foreign exchange activity, automating several manual procedures and reducing reliance on external settlement networks.”

Richard Bibbey, Interim Global Head of FX & Commodities for HSBC, notes that as a result of being a global brand, HSBC and its clients conduct thousands of foreign exchange transactions in dozens of countries. He highlights how DLT can help to drastically improve the “efficiency of these internal flows.”

He concludes: “Following successful implementations inside the bank, we are now exploring how this technology could help multinational clients – who also have multiple treasury centres and cross-border supply chains.”

The bank has stipulated three main benefits of using DLT technology.

The first is “singularity, transparency, and immutability.” They note how this is beneficial because it allows for a “shared, single vision of the truth of intra-company trades.”

Their next key benefit is “payment orchestration,” which allows for confirmation and settlements to be automated through “matching and netting transactions, which reduces costs and reliance on external networks.”

The final point highlighted is “balance sheet optimisation,” which for HSBC enables a “consolidated, global view of forward cash flows, and certainty of funds throughout the funding cycle.”

HSBC’s use of DLT is promising as it marks another step towards mainstream adoption, with banks now paying significant attention to distributed ledger technology.

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