| NEW YORK
NEW YORK Oct 18 Eight financial services
companies led by JPMorgan Chase & Co and Barclays Bank
Plc have completed the test of an equity swaps
post-trade transaction using blockchain technology and smart
contracts, financial technology firm Axoni said in a statement
The blockchain-powered post-trade prototype was built by
Axoni. The other participating institutions are Credit Suisse
, Citigroup Inc, financial data and technology
provides Thomson Reuters Corp and IHS Markit,
as well as business consulting firm Capco.
Thomson Reuters is the parent company of Reuters News.
Blockchain technology powers the digital currency bitcoin
and enables data-sharing across a network of individual
computers. It has gained worldwide popularity because of its
usefulness in recording and keeping track of assets across
practically all industries.
Smart contracts, on the other hand, are self-executing
Greg Schvey, Axoni chief executive, said the
blockchain-enabled post-trade processing system could translate
into substantial cost savings for the financial companies
involved in the transaction.
"The parties run a node that connects them with others on
the network," he told Reuters in an interview
Schvey said the current processing of equity swaps could be
cumbersome and time-consuming, with each individual dealer
having its own internal systems and a single trade going through
several such systems. Given the complex nature of equity swaps,
trades often break down because of the myriad layers of
processing a transaction goes through before being completed, he
"What happens now is that with this technology, the parties
to the transaction, by virtue of the way blockchains work, are
both co-processing and simultaneously running the same code,
updating the state of that contracts over time, such that it
removes the room for misalignment."
The pilot project started in June. In early September, the
participants conducted a diverse set of 133 structured test
cases to assess the capabilities of blockchain technology for
use with equity derivatives, Axoni said.
"The proof of concept has shown that blockchain technology
lends itself well to solving for the operational complexity and
volumes of equity swaps lifecycle processing," said Roman
Eisenberg, global head, prime services technology, at Credit
"This can possibly present an opportunity to not only save
costs but also reduce operational risks while growing the client
offering," he added.
(Reporting by Gertrude Chavez-Dreyfuss; Editing by Steve