Citi has recently introduced an application leveraging blockchain technology to facilitate bilateral spot foreign exchange (FX) trades. The application, was developed as part of Project Guardian, a joint initiative by the Monetary Authority of Singapore and the financial industry.

Real-Time Blockchain Recording: Citi's On-Chain Solution

The initial phase of the application, which focused on testing spot FX for USD/SGD, demonstrated the potential for application across various fiat currency pairs. Currently not available to clients, Citi's on-chain solution integrates real-time streaming of price quotes with the secure recording of trade executions on a blockchain.

This ensures cryptographically secure record-keeping of trade data, aligning with institutional practices and regulatory requirements. Access to underlying trade details is restricted to counterparties involved in a quote or trade.

Sam Hewson, the Head of FX Sales at Citi, emphasized the broader strategy: "We are taking steps towards building foundational capabilities to offer liquidity, pricing and risk management to our global clients wherever they choose to trade – be it on traditional rails or on blockchain."

The application explores the use of oracles for bilateral messaging through a request for a streaming mechanism. This enables best execution analysis through real-time post-trade analysis on a unified platform. Citi collaborated with T. Rowe Price Associates, Inc, and Fidelity International on the development of the application under the Project Guardian initiative.

Blue Macellari, the Head of Digital Asset Strategy at T. Rowe Price Associates, Inc, highlighted the significance of user-friendly institutional-grade execution. She stated: "This application is an important first step towards unlocking the value of a full end-to-end blockchain-based trading lifecycle."

Emma Pecenicic, the Head of Digital Propositions and Partnerships for APACxJ Distribution at Fidelity International, expressed the global asset manager's eagerness to engage in technological innovations like Citi's Blockchain FX Solution. She believes that distributed ledger technology has the potential to develop financial systems over time, democratizing access to financial services and alternative investments.

Avalanche Captures Counterparty-Specific Data for Citi

The private permissioned instance of the Avalanche blockchain was employed in the current phase of the application. This blockchain captured price quotes and trade confirmations specific to each counterparty. The development aligns with MAS's Project Guardian, focusing on testing applications in asset tokenization and decentralized finance while managing associated risks to financial stability and integrity.