ICAP has completed a proof of technology test case for a distributed ledger based on blockchain technology. The company’s Post Trade Risk and Information (PTRI) division has developed the proof of technology, using the multi-asset messaging and matching Harmony network and blockchain infrastructure from Axoni to build a private, peer-to-peer distributed ledger network for smart contracts. The new technology could offer participants a practical, cost-effective way to achieve greater accuracy and security, while ensuring regulatory compliance.

The Axoni technology provides lifecycle automation, transactional privacy, trade processing suitable for high volume markets, automated reporting and a permissioning system to onboard new network participants. ICAP used the infrastructure to import matched messages about bilaterally executed spot/forward FX block trades, converting them into blockchain-based smart contracts. These were then distributed to nine participant nodes on the blockchain network, from where additional services including valuation, compression and reporting could be offered.

The proof of technology demonstrated the capabilities to: provide a golden source of user transaction and reference data for multiple assets; enrich and enhance accurate data, attaching further information where necessary; continuously update data stored locally on user servers; secure messages so they could only be viewed by participants with the correct permissions; reduce operational risk; improve reconciliation and operations processes; and create back office and technology cost savings. The blockchain technology can also be operated safely in parallel with existing technologies without requiring an immediate switchover.

Over the months ahead ICAP’s PTRI division will discuss with participants how they can access the golden data source and start to benefit from technology cost savings while ensuring regulatory compliance.

“In successfully completing a proof of technology test, ICAP has demonstrated one of the first real world applications of distributed ledger technology that has the ability to significantly transform the post-trade landscape,” said Jenny Knott, CEO of ICAP’s PTRI division. “We have combined our expertise, networks and technology with Axoni’s distributed ledger technology to push the boundaries of post-trade innovation.”

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