In a remarkable development, Citi has launched a pioneering application that capitalizes on blockchain technology to streamline the pricing and execution of bilateral foreign exchange (FX) trades. As highlighted by Avalanche, this cutting-edge application, forming a part of Project Guardian, a joint initiative by the Monetary Authority of Singapore (MAS) and the financial industry, marks a significant stride in blending traditional financial operations with modern technological advancements.
Citi has tested the use of blockchain infrastructure to price and execute simulated FX trades on Avalanche Evergreen Subnets.
— Avalanche 🔺 (@avax) November 16, 2023
This Proof of Concept from @Citi is part of Project Guardian, a collaboration by the Monetary Authority of Singapore (MAS) & the financial industry. 🧵👇 pic.twitter.com/dVnmfG562r
The application’s primary function centers around spot FX trades, initially tested with USD/SGD pairings. Yet, its versatile design permits adaptation for any fiat currency pair. Notably, this application remains exclusive to its developmental phase and is not yet available for client use.
Citi’s innovative solution introduces real-time streaming of price quotes while concurrently recording trade data on a blockchain. This approach ensures a tamper-proof and secure ledger, aligning with institutional practices and regulatory standards. Access to specific trade details is restricted to relevant counterparties, bolstering privacy and security.
Sam Hewson, Citi’s Head of FX Sales, emphasized the company’s commitment to providing comprehensive services across various trading platforms, whether traditional or blockchain-based. Shobhit Maini, Co-Head of Digital Assets for Markets at Citi, further elaborated on the objective to enhance all aspects of the trade lifecycle, including pre-trade and execution phases.
Collaboration has been a key aspect of this initiative. Citi joined forces with T. Rowe Price Associates, Inc., and Fidelity International, gaining insights into institutional-grade execution and exploring the potential of distributed ledger technology.
The application utilizes a private, permissioned instance of the Avalanche blockchain. This choice aids in accurately capturing price quotes and trade confirmations for each counterparty. The choice of Avalanche is particularly noteworthy given its recent market performance.
The price of Avalanche (AVAX) has seen a remarkable surge, increasing by 67.38% in the past week, with a current price of $22.88. This surge is reflected in various technical indicators, like the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD), suggesting a bullish momentum but also cautioning potential overbought conditions.
These developments signal a transformative phase in financial services, where traditional mechanisms are increasingly integrating with innovative technologies. Citi’s foray into blockchain-based FX trading solutions not only showcases the potential for efficiency and security improvements but also highlights the growing relevance of digital assets in mainstream finance.
