Fnality, HQLAX and major banks execute first cross-chain repo swap pilot

Fnality and HQLAX announce the successful completion of the first proof of concept (PoC) delivery versus payment (DvP) repo settlement across the Fnality Payment System (FnPS) and HQLAX’s Digital Collateral Registry, bridging the distributed ledger technologies (DLT) of Enterprise Ethereum and R3 Corda, respectively.

The proof of concept was supported by the project participants – Banco Santander, Goldman Sachs and UBS – and achieved by connecting HQLAX with the Ecosystem TestNet environment, simulating the Fnality Payment System, built in collaboration with Adhara.

The transactions were atomically settled across the two platforms, meaning that each system’s boundaries were respected (i.e. no collateral was represented on the FnPS, and no cash was represented on HQLAX’s Digital Collateral Registry) and the swap only completed when both systems confirmed all criteria had been fulfilled. This also demonstrates how platforms running on different DLTs can be linked to deliver enhanced resilience, reduced risks, and reduction of fragmented liquidity.

The success of the test means that Fnality, HQLAX and their mutual clients can now focus on the use case implementation, bringing the possibility for intraday settlements one step closer to reality.

Manuel Villa Arechaga, head of SecFinance, at Santander said: “We are delighted to play our part in advancing the state of the art with respect to delivery versus payment in the digital financial marketplace infrastructure.”

Amar Amlani, Head of EMEA Digital Assets, Goldman Sachs said: “Efficient cross-chain settlement is going to be fundamental to the scalable development of TradFi on DLT whilst enabling firms to realize the full potential of this innovative technology – it’s exciting to see the successful outcome of the work between HQLAX and Fnality and we look forward to developing this use-case further.”

Hyder Jaffrey, Head of Principal Investments and Digital Assets, UBS Investment Bank said: “It’s great to see proven evidence of interoperability between Fnality and HQLAX. Cross chain DvP, enabling a Digital Repo, is critical in the wider delivery of a functioning digital asset market.”

Rhomaios Ram, Fnality International CEO, said: “This DvP PoC is a significant step for Fnality as we enable a single pool of liquidity for our participants. Coupled with PvP, participants can swap their funds from their home currency to execute a DvP settlement with other platforms and business applications. Leveraging the strengths of each platform and ensuring they operate seamlessly is what has been exciting to see. This combination can deliver exactly the type of operational efficiencies that have been promised by DLT. Importantly, HQLAX, Fnality and its participants are at the forefront of this innovation, applying DLT to transform traditional financial systems.”

Guido Stroemer, HQLAX CEO, said: “Enabling the seamless execution of DvP involving collateral on our platform demonstrates our commitment to extending the mobility and use of collateral for participants of HQLAX.”

Julio Faura, CEO at Adhara said: “Building on the success of the Nivaura POC (Bond Issuance) and the Finteum POC (PvP), this is the third collaboration successfully delivered on the Ecosystem TestNet. The adoption of interop standards across different platforms has matured to a level where it is clear that best-of-breed solutions will work seamlessly in this new market infrastructure ecosystem.”

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