R3, Fnality & Finteum Join Forces to Improve FX Inefficiencies

The partnership will focus on intraday forex swaps between large institutions.

Fnality and Finteum, two companies operating in the blockchain space, have joined forces to improve inefficiencies in the foreign exchange (forex) industry, by utilizing technology built on R3’s Corda platform.

Forex is the largest and most liquid market in the world. However, within the trading environment, outdated systems and technology have created duplicative processes and high pre and post-trade processing times.

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The collaboration announced today will see the two companies working together to deliver interoperability between the Finteum application, which is built on the Corda platform, and Fnality’s Ethereum-based Utility Settlement Coin (USC) solution.

Partnership to focus on intraday FX swaps

The interoperability between the two firms focuses on intraday forex swaps between large institutions. This will be achieved by Finteum leveraging R3’s Corda platform to create a global financial market for intraday liquidity, the statement said.

Brian Nolan of Finteum
Brian Nolan, Co-founder of Finteum
Source: LinkedIn

Commenting on the partnership, Brian Nolan, the co-founder of Finteum, said: “Any attempt for a bank treasurer to execute an intraday FX swap involves settlement risk and timing uncertainty in the current market.

“Intraday FX swaps are therefore an untapped source of value for bank treasurers.  Large banks could each save tens of millions by creating efficiencies in their intraday liquidity. Instant gross settlement doesn’t work for every use case but is important for the initial payments in intraday FX. 

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“Using R3’s Corda platform, we are able to work with organisations at the forefront of industry change – such as Fnality – to deliver crucial responses to market needs. We want to work with three or four banks to support integration and provide feedback while we test and improve the solution and bring it closer to production.”

Under the agreement, market participants now have a shared data record of their orders and trades, thanks to Finteum technology. According to the statement, this means settlements won’t fail, and it will also be easier to share market information with third parties.

The USC provides a digital cash system which uses blockchain to settle financial transactions. The partnership will also facilitate instant settlement.

This is because, by using the Finteum application, USC funds are reserved before an order is placed in the Central Limit Order Book. The order can be subsequently canceled, freeing up the USC.

FX settlement process needs more transparency

David Rutter of CEO R3
David Rutter, CEO, R3

“The FX settlement process needs increased transparency and traceability. Corda is fit to deliver on both counts. It was built to be fully interoperable from day one, and Fnality’s USC is a perfect example of how our platform can be used in conjunction with other systems to answer crucial industry needs,” added David E. Rutter, CEO at R3.

“We look forward to seeing Finteum continue to create industry-leading initiatives for the financial services sector, supported by cutting-edge technology.”

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