Multi-bank blockchain working group completes test for equity swaps

Group including Barclays, JP Morgan, Credit Suisse and others complete tests for post-trade processing of equity swaps using blockchain technology.

A group of firms including top investment banks have completed a test using blockchain technology to manage confirmations and post-trade processing for OTC equity swaps.

The test used smart contracts generated from trades submitted by dealers on the distributed network which were synchronised and recorded as individual transactions.

The working group consists of Barclays, Citi, Credit Suisse, JP Morgan, IHS Markit, Thomson Reuters, Capco and is organised by distributed ledger technology firm, Axoni.

Axoni said the test had demonstrated the “potential efficiency gains and cost savings” attainable by using blockchain to complete complex post-trade processes for equity swaps.

Head of equities for EMEA at Barclays Investment Bank, Richard Evans, explained that industry collaboration is key in driving blockchain innovation.

“Barclays is keen to remain at the forefront of this,” he said.

In September, the working group also conducted a set of 133 structured test cases to assess the functional and non-functional capabilities of blockchain for equity derivatives.

Axoni said its software achieved a 100% success rate across all of the tests.

Global head of prime services technology at Credit Suisse, Roman Eisenberg, said the tests have shown that “blockchain technology lends itself well to solving the operational complexity and volumes of the equity swaps lifecycle processing.”

Managing director of equities operations at JP Morgan, Daniel Parsell, added that blockchain is a “key area of exploration for JP Morgan.”

“Engaging in projects like Axoni’s has the potential to improve the bank’s internal efficiency and ultimately our clients’ experience,” he said.