1 year ago
50 Wells Fargo & Company and HSBC Bank said that the blockchain-based solution they are using for bilateral FX settlements is expanding to feature the offshore Yuan (CNH).
The offshore Yuan is the fifth currency to be settled between the two banks using a shared settlement ledger that now includes the Canadian dollar, the US dollar, the Euro, and the British pound sterling. Since it launched the shared DLT solution in December 2021 announcement, HSBC and Well Fargo have already settled more than US$200 billion in transactions, and plan to add more currencies in the coming months.
While commenting on the announcement, the global head of FX Partnerships & Propositions at HSBC, Mark Williamson, stated:
“Extending CNH PvP settlement to Wells Fargo is an important milestone for reducing Herstatt Risk outside G10 currencies. This development is only our first step in extending our coverage into Emerging Markets currencies.”
The global head of Rates and FX Solutions, at Wells Fargo Corporate & Investment Bank, Vince Hindman, commented:
“We are pleased to expand the capabilities of the platform to include CNH, allowing us to reduce risk in the payment settlement process. The collaboration shows that we can pursue innovative technologies and apply them in a way that enhances our existing infrastructure and ultimately benefits our clients.”
The shared, private ledger is fully managed by joint operations teams at HSBC and Wells Fargo with whole visibility by every party to the relevant FX settlement, together with shared FX transaction records.
The platform is governed under the infrastructure of an agreed rulebook and it facilitates efficient netting and settlement of FX transactions between HSBC and Wells Fargo in GBP, USD, EUR, CAD, and now CNH. Participants in this network are just privy to transactions to which they are a counterparty.
This platform is powered by Baton Systems’ proprietary CORE distributed ledger technology (DLT) and is governed by the Baton rulebook. Notably, the platform enables the participants to effectively settle bilateral cross-border obligations across many onshore and offshore currencies, together with the added flexibility of extended settlement Windows to enhance PvP risk mitigation opportunities.
