Table of Contents
- SWIFT Completes Blockchain Solution to Reduce the Costs Associated with Corporate Actions
- Could Ripple Be Involved?
Interbank cooperative SWIFT announced the successful completion of its blockchain-based solution to reduce the costs associated with corporate actions.
The Society for Worldwide Interbank Financial Telecommunications (SWIFT) announced that it successfully concluded an experimental solution to reduce the costly frictions associated with corporate actions.
In partnership with 6 leading securities players, including @AmericanCentury, @Citi & @NorthernTrust, we've successfully trialled an innovative #blockchain solution to reduce costs & frictions in corporate actions. Check out the pilot results & next steps: https://t.co/8PFjKaNZo0 pic.twitter.com/kYO9koXLlN— Swift (@swiftcommunity) March 23, 2023
Together with six leading securities industry participants, including Citi, Northern Trust and American Century Investments, SWIFT completed a pilot of a blockchain-based solution that could reduce the costs associated with communicating significant corporate events to investors. The cooperative said that its solution could benefit the industry and provide a “clear and consistent” view of the corporate action process throughout the investor ecosystem, along with quickly providing alerts when changes or updates occur.
SWIFT Completes Blockchain Solution to Reduce the Costs Associated with Corporate Actions
When publicly traded companies share news of corporate actions with their investors, they depend on manual processes. The manual process of relaying this information often results in recipients receiving inaccurate or missing data. To address this issue, SWIFT partnered with Symbiont’s blockchain platform to automate and boost the accuracy of corporate action workflows.
Jonathan Ehrenfeld, Securities Strategy Director at SWIFT, said:
“Our analysis found that asset managers often receive notifications from up to 100 different sources about the same corporate event, and the data is often different or contradictory from one source to another.” Adding, “This means asset managers need to manually comb through the different sources to gain a single view of the event before they can make necessary decisions.”
The program involved participants providing data extracts from corporate actions, which SWIFT’s Translator tool converted into a blockchain-system readable format. The data was then uploaded onto a dedicated platform developed for the pilot. The six participants performed peer-to-peer event comparisons with smart contracts matching common data fields and flagging unmatched data. A single accurate “shared copy” was created with composite data about a specific corporate action.
Tom Zschach, Chief Innovation Officer at Swift, explained:
Our experiments harnessed the power of blockchain technology to give all market participants a single, accurate view of a corporate action event.
Could Ripple Be Involved?
When news initially broke that SWIFT would pilot a blockchain-based cost-saving solution in partnership with Symbiont, the idea that Ripple may be involved was mentioned. The idea was fuelled by a 2015 press release announcing that Symbiont created a Ripple Gateway for Counterparty. The Ripple Gateway allows users to send XCP, Counterparty’s native token, or any other Counterparty asset.
Mark Smith, CEO of Symbiont, said at the time:
By being a member of the Ripple network, one may potentially become part of other users' trust networks'. Such trust networks guarantee, first of all, that one only does business with those whom one has explicitly chosen; and further, may allow you to exchange a wide range of currencies, including fiat. Users of Symbiont's gateway will naturally benefit from the trust networks Symbiont joins. The development of this gateway demonstrates Symbiont's development team's ability to work with any distributed ledger technology.
Although Ripple purports to eventually replace cross-border settlements and payments such as SWIFT-based bank transfers and Western Union payments, we might see a partnership soon arise. As SWIFT finally embraces the power of blockchain technology, it would be plausible to think that it might collaborate with an established cross-border payment solution such as Ripple.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.