Fnality and HQLAᵡ demonstrate together with Banco Santander, Goldman Sachs and UBS, the first cross-chain repo swap pilot across Corda and Enterprise Ethereum, paving the way for the settlement of intraday transactions
5h December 2022: Fnality and HQLAᵡ announce the successful completion of the first proof of concept (PoC) delivery versus payment (DvP) repo settlement across the Fnality Payment System (FnPS) and HQLAᵡ’s Digital Collateral Registry, bridging the distributed ledger technologies (DLT) of Enterprise Ethereum and R3 Corda, respectively.
The proof of concept was supported by the project participants – Banco Santander, Goldman Sachs and UBS – and achieved by connecting HQLAᵡ with the Ecosystem TestNet environment, simulating the Fnality Payment System, built in collaboration with Adhara.
The transactions were atomically settled across the two platforms, meaning that each system’s boundaries were respected (i.e., no collateral was represented on the FnPS, and no cash was represented on HQLAᵡ’s Digital Collateral Registry) and the swap only completed when both systems confirmed all criteria had been fulfilled. This also demonstrates how platforms running on different DLTs can be linked to deliver enhanced resilience, reduced risks, and reduction of fragmented liquidity.
The success of the test means that Fnality, HQLAᵡ and their mutual clients can now focus on the use case implementation, bringing the possibility for intraday settlements one step closer to reality.
Manuel Villa Arechaga, head of SecFinance, at Santander said: “We are delighted to play our part in advancing the state of the art with respect to delivery versus payment in the digital financial marketplace infrastructure.”
Amar Amlani, Head of EMEA Digital Assets, Goldman Sachs said: “Efficient cross-chain settlement is going to be fundamental to the scalable development of TradFi on DLT whilst enabling firms to realize the full potential of this innovative technology – it’s exciting to see the successful outcome of the work between HQLAᵡ and Fnality and we look forward to developing this use-case further.”
Hyder Jaffrey, Head of Principal Investments and Digital Assets, UBS Investment Bank said: “It’s great to see proven evidence of interoperability between Fnality and HQLAᵡ. Cross chain DvP, enabling a Digital Repo, is critical in the wider delivery of a functioning digital asset market.”
Rhomaios Ram, Fnality International CEO, said: “This DvP PoC is a significant step for Fnality as we enable a single pool of liquidity for our participants. Coupled with PvP, participants can swap their funds from their home currency to execute a DvP settlement with other platforms and business applications. Leveraging the strengths of each platform and ensuring they operate seamlessly is what has been exciting to see. This combination can deliver exactly the type of operational efficiencies that have been promised by DLT. Importantly, HQLAᵡ, Fnality and its participants are at the forefront of this innovation, applying DLT to transform traditional financial systems.”
Guido Stroemer, HQLAᵡ CEO, said: “Enabling the seamless execution of DvP involving collateral on our platform demonstrates our commitment to extending the mobility and use of collateral for participants of HQLAᵡ.”
Julio Faura, CEO at Adhara said: “Building on the success of the Nivaura POC (Bond Issuance) and the Finteum POC (PvP), this is the third collaboration successfully delivered on the Ecosystem TestNet. The adoption of interop standards across different platforms has matured to a level where it is clear that best-of-breed solutions will work seamlessly in this new market infrastructure ecosystem.”
Founded in 2019, Fnality is a consortium of global banks that is building a regulated payment system to support the growing industry adoption of tokenised assets and marketplaces. By using distributed ledger technology (DLT) Fnality offers central banks a simpler, faster, safer, and more resilient, risk-free system for managing digital payments. Fnality developed the Fnality Payment Systems (FnPS), a network of fully regulated DLT-based payment systems, one in each currency area, enabling its participants to settle single currency on-chain payments (P), as well as on a Delivery-versus-Payment (DvP) and a Payment-versus-Payment (PVP) basis.
The Sterling Fnality Payment System has recently been designated by HM Treasury as a systemically important payment system in the UK, signifying a crucial milestone achieved in the Fnality’s UK go live journey and meaning that the Sterling Fnality Payment System is now the first distributed ledger technology (DLT) based, fully-regulated payment system in the world.
With a global roll-out set for 2023, Fnality’s network of distributed Financial Market Infrastructures (dFMIs) will provide near-real-time 24/7 settlement capability and interoperating with other platforms, to allow banks to significantly reduce their intraday liquidity requirements.
Fnality’s shareholders comprise: Banco Santander, BNY Mellon, Barclays, CIBC, Commerzbank, Credit Suisse, Euroclear, ING, KBC Group, Lloyds Banking Group, Mizuho Bank, MUFG Bank, Nasdaq, Nomura, Sumitomo Mitsui Banking Corporation, State Street Corporation, and UBS.
For more information, please visit www.fnality.org
HQLAᵡ is a financial technology innovation firm that specialises in delivering liquidity management and collateral management solutions for institutional clients in the global securities lending and repo markets.
For more information, please visit www.hqla-x.com
Adhara is a leading software company that provides real-time, multi-currency, liquidity management and international payment solutions. Adhara’s platforms deliver certainty by atomically clearing and settling tokenized fiat transactions over enterprise-grade, smart contract-enabled distributed ledgers, benefiting commercial banks, their corporate clients, central banks, exchanges and international payment. Together, Adhara’s components provide comprehensive liquidity management capabilities for payments, market making and funding solutions, helping to manage FX risk and leverage global liquidity (on a network) in real-time. Adhara has a global reach with development hubs in Spain & South Africa and business bases in the UK and Singapore. Its diverse team has decades of experience across commercial banking technology, capital markets, blockchain and product design & development – including an Engineering team with excellence in cryptography, enterprise systems and end-user app development.
For more information, please visit www.adhara.io
UBS convenes the global ecosystem for investing, where people and ideas are connected and opportunities brought to life, and provides financial advice and solutions to wealthy, institutional and corporate clients worldwide, as well as to private clients in Switzerland. UBS offers investment solutions, products and impactful thought leadership, is the leading global wealth manager, provides large-scale and diversified asset management, focused investment banking capabilities, and personal and corporate banking services in Switzerland. The firm focuses on businesses that have a strong competitive position in their target markets, are capital efficient and have an attractive long-term structural growth or profitability outlook.
UBS is present in all major financial centers worldwide. It has offices in more than 50 regions and locations, with about 30% of its employees working in the Americas, 29% in Switzerland, 20% in the rest of Europe, the Middle East and Africa and 21% in Asia Pacific. UBS Group AG employs more than 72,000 people around the world. Its shares are listed on the SIX Swiss Exchange and the New York Stock Exchange (NYSE).
For more information, please visit www.ubs.com
About Banco Santander
Banco Santander (SAN SM, STD US, BNC LN) is a leading commercial bank, founded in 1857 and headquartered in Spain. It has a meaningful presence in 10 core markets in the Europe, North America and South America regions, and is one of the largest banks in the world by market capitalization. Santander aims to be the best open financial services platform providing services to individuals, SMEs, corporates, financial institutions and governments. The bank’s purpose is to help people and businesses prosper in a simple, personal and fair way. Santander is building a more responsible bank and has made a number of commitments to support this objective, including raising €220 billion in green financing between 2019 and 2030, as well as financially empowering more than 10 million people over the same period. At the end of the third quarter of 2022, Banco Santander had €1.2 trillion in total funds, 159 million customers, of which 27 million are loyal and 50 million are digital, 9,100 branches and 203,000 employees.
Santander Corporate & Investment Banking (Santander CIB) is Santander’s global division that supports corporate and institutional clients, offering tailored services and value-added wholesale products suited to their complexity and sophistication, as well as to responsible banking standards that contribute to the progress of society.
For more information, please visit: www.santander.com
About Goldman Sachs
Goldman Sachs is a leading global financial institution that delivers a broad range of financial services across investment banking, securities, investment management and consumer banking to a large and diversified client base that includes corporations, financial institutions, governments and individuals. Founded in 1869, the firm is headquartered in New York and maintains offices in all major financial centres around the world.
For more information, please visit: www.goldmansachs.com