Wells Fargo and HSBC Establish Bilateral Agreement to Settle FX Transactions Through a Blockchain-based Solution
December 13 2021 - 4:00AM
Business Wire
Strategic agreement between the two companies optimizes
settlement of foreign exchange transactions and reduces settlement
risk
Wells Fargo & Company (NYSE: WFC) and HSBC Bank plc today
announced an agreement to use a blockchain-based solution for the
netting and settlement of matched foreign exchange (FX)
transactions. Through this agreement, Wells Fargo and HSBC will
jointly use a shared settlement ledger to process US dollar,
Canadian dollar, British pound sterling and Euro transactions with
plans to extend the platform to settle additional currencies in the
near future. Utilizing blockchain technology, this solution
provides each bank with ongoing real-time transparency of
settlement status for matched FX transactions in the applicable
currencies. It will enable both parties to utilize
Payment-vs-Payment (PvP) settlement netting in an efficient manner,
which will reduce settlement risks and associated costs of
processing FX transactions.
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the full release here:
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Mark Jones, co-head of Macro, Wells Fargo
Corporate & Investment Bank. (Photo: Wells Fargo)
“We are pleased to announce that we will be utilizing blockchain
technology for the first time in the settlement process of
cross-border payments,” said Mark Jones, co-head of Macro, Wells
Fargo Corporate & Investment Bank. “We are extremely excited to
be collaborating with HSBC on a project which places both
organizations at the forefront of blockchain innovation. We believe
this will be the first step of many utilizing transformative
technology across our industry in the years ahead.”
The shared, private ledger enhances settlement speed and
efficiency by using blockchain technology, applied under the
framework of an agreed rulebook, to optimize PvP netting
opportunities between Wells Fargo and HSBC. The banks will be able
to net bilateral payment obligations and settle on a pre-agreed
cadence multiple times per day within the flexibility of the
settlement windows enabled by this technology. The offering builds
on HSBC’s FX Everywhere platform which has settled over three
million intrabank trades worth over $2.5tn since going live in
2018. Based on the results of this arrangement, the parties hope to
expand the system to add more participants and to introduce a
central Financial Market Infrastructure (FMI) provider to
administer the platform rulebook.
Commenting on the announcement, Mark Williamson, global head of
FX Partnerships & Propositions at HSBC said: “As financial
services continue to digitize the store of payment and value on
blockchain, we are delighted to work with Wells Fargo in the
adoption of this important cross-border digital backbone for the
confirmation and settlement of Foreign Exchange trades. We are
excited to continue to grow the FX Everywhere network whilst
ensuring that we are well placed to transact in new forms of
regulated digital currencies such as Central Bank Digital
Currencies.”
The platform runs on Baton Systems’ blockchain inspired
proprietary CORE distributed ledger technology and is governed by
the Baton rulebook. The platform enables participants to
efficiently settle bilateral cross border obligations across
multiple onshore and offshore currencies, coupled with the added
flexibility of extended settlement windows to optimize PvP risk
reduction opportunities. Wells Fargo’s depth of USD liquidity and
strong franchise in the Americas complements HSBC’s strength in
Europe and Asia’s emerging markets.
Notes to Editor:
The FX and payments markets continue to prioritize reducing
settlement risk, utilizing PvP risk reduction tools, on-us
settlement and payment netting mechanisms. Recent global industry
body statements on these topics include the FX Global Code’s
settlement risk principles 35 and 50, the Financial Stability
Board’s G20 roadmap for enhancing cross-border payments, and the
Committee on Payments and Market Infrastructures Stage 2 report to
the G20.
About Wells Fargo
Wells Fargo & Company (NYSE: WFC) is a leading financial
services company that has approximately $1.9 trillion in assets,
proudly serves one in three U.S. households and more than 10% of
small businesses in the U.S., and is the leading middle market
banking provider in the U.S. We provide a diversified set of
banking, investment, and mortgage products and services, as well as
consumer and commercial finance, through our four reportable
operating segments: Consumer Banking and Lending, Commercial
Banking, Corporate and Investment Banking, and Wealth &
Investment Management. Wells Fargo ranked No. 37 on Fortune’s 2021
rankings of America’s largest corporations. In the communities we
serve, the company focuses its social impact on building a
sustainable, inclusive future for all by supporting housing
affordability, small business growth, financial health, and a
low-carbon economy. News, insights, and perspectives from Wells
Fargo are also available at Wells Fargo Stories.
Additional information may be found at www.wellsfargo.com |
Twitter: @WellsFargo.
About HSBC Holdings plc
HSBC Holdings plc, the parent company of HSBC, is headquartered
in London. HSBC serves customers worldwide from offices in 64
countries and territories in its geographical regions: Europe,
Asia, North America, Latin America, and Middle East and North
Africa. With assets of $2,969bn at 30 September 2021, HSBC is one
of the world’s largest banking and financial services
organisations.
News Release Category: WF-IT
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Wells Fargo Susan Monahan, +44 203 942 9824
Susan.Monahan@wellsfargo.com
Hannah Sloane, (347) 802-5942 Hannah.Sloane@wellsfargo.com
HSBC Paul Smith, +44 20 7991 4867
paul.a.smith@hsbc.com
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