Citi developed a public blockchain FX solution as part of Project Guardian, a Monetary Authority of Singapore tokenization initiative.
Citi worked with T.Rowe Price and Fidelity International on a permissioned instance of the Avalanche blockchain. Separately, T. Rowe Price (AUM $1.3 trillion) has been working for a while on FX Swaps on Avalanche.
“While blockchains have demonstrated promise for streamlining post-trade processes, our objective is to drive improvement at all stages of the trade life cycle, including pre-trade and execution,” said Shobhit Maini, Co-Head of Digital Assets for Markets at Citi.
In the trial solution, spot FX prices for the USD/SGD pair were streamed to the blockchain using an oracle. This enabled bilateral messaging between the counterparties. Streamed prices were only visible to the counterparties of the trade.
Request for streaming involves a dealer offering a series of firm prices only executable for a limited time. This usually enables the client to compare prices from multiple liquidity providers in real time. One can imagine a smart contract making the price selection.
Once the smart contract selects the price, the blockchain acts as an immutable record of the trade.
“This application is an important first step towards unlocking the value of a full end-to-end blockchain based trading lifecycle,” said Blue Macellari, Head of Digital Asset Strategy at T. Rowe Price Associates.
In the past few months Citi has ramped up its blockchain activities. It initiated the Regulated Liability Network, which brings together central banks and commercial banks in a shared blockchain network for tokenized money and assets. In September, Citi unveiled its Citi Token Services, including a pilot for tokenized deposits. Additionally, the following month it went live on two smart contract platforms, one for Chinese securities settlement and the other for syndicated loans.
