Barclays and Citi are among nine financial institutions to participate in a proof of concept (PoC) developed by FX settlement specialist CLS and IBM for a blockchain-powered services platform.
CLS and IBM’s PoC and the distributed ledger technology platform, known as LedgerConnect, aims to allow banks, buy-side and sell-side, FinTech firms and software vendors to deploy, share and use various services hosted on a blockchain network.
The services include know your customer processes, sanctions screening, collateral management, derivatives post-trade processing, reconciliation and market data.
Nine institutions, led by Barclays and Citi, have agreed to contribute to the PoC, with services from a number of vendors including Baton Systems, Calypso, OpenRisk and SynSwap.
Both CLS and IBM stated that as firms increasingly work with DLT for multiple operations, capital markets remain saturated with numerous systems performing the same business functions and tasks.
The LedgerConnect PoC aims to remove this problem using blockchain technology to reduce inefficiencies and improve the speed of doing business with a single, shared version of events, and a single implementation for common business functions.
“LedgerConnect is part of CLS’s strategy to explore how we can provide safe and robust solutions that create efficiencies and reduce risk for a diverse range of firms operating in the financial markets. We expect LedgerConnect to deliver enhanced efficiencies and economies of scale over single-purpose distributed ledger networks,” said Alan Marquard, chief strategy officer and development officer at CLS.
Marie Weick, general manager at IBM Blockchain, added that together IBM and CLS are early pioneers in advancing the use of blockchain technology within financial services.
“Building on the success of CLSNet and leveraging the strong relationship CLS has with the world’s leading financial institutions, LedgerConnect is uniquely positioned as a blockchain marketplace for the financial services industry, which will accelerate innovation across the ecosystem with value added services for blockchain networks.”
CLS launched its bilateral payment netting platform, known as CLSNet, alongside a post-trade monitoring and reporting tool earlier this month, with Mesirow Financial and Mountain Pacific Advisors already using the services.
Once the PoC is completed and regulatory approvals are received, CLS and IBM added that they plan to open the platform to the wider industry.