Yilianhuiye is preparing to move foreign exchange transactions to the blockchain and will officially launch next year

ICAP, a well-known securities brokerage, is preparing to move thousands of foreign exchange transactions to the blockchain, a sign that this emerging standard is taking over the global market.

The London-based group, which will change its name to NEX in January, will make product codes available to clients in March, giving institutional investors a more transparent way to track and value the $1.7 trillion a day spot market .

Meanwhile, Euroclear, one of the world’s largest clearing houses, and its partner, US financial technology group Paxos, have completed a two-week blockchain trial using blockchain technology to conduct more than 600 test transactions in the London gold market.

The projects mark further significant progress in the market for blockchain, the electronic ledger that aims to automate the trust and verification networks that underpin modern finance.

Banks see the technology as a way to cut costs in back-office systems and unify data to meet growing demands for trade reporting and client portfolio valuations.

However, many have found this technology difficult to implement and are gradually turning to infrastructure operators.

ICAP and US technology group Axoni will use the Traiana subsidiary, which acts as a clearinghouse for a $2 trillion foreign exchange, fixed income and swaps market and will be a key component of NEX, which focuses on digital market infrastructure.

Jenny Knott, Head of Post-Trade Risk and Information at ICAP, said:

“By the end of March, users will have access to their own blockchain node. We create a digital ledger in the cloud.”

“We are creating the Nex technology platform and licensing the Traiana legal entity so that we can run both systems in parallel. Over time, we will be able to shut down the old system.”

Traiana is responsible for checking trade, reference, market and portfolio data before it is sent to regulators, clearing houses or financial institutions themselves. In this blockchain, the transaction data will serve as the "genesis block", and the encrypted details are sent to other institutions for decryption and verification.

Knott said institutional investors, such as hedge funds and asset managers, have been particularly enthusiastic about this type of blockchain.

Euroclear, a Brussels-based brokerage that clears 27 trillion euros in bonds, stocks, funds and derivatives, is exploring with Paxos how to modernize the gold market. Precious metals trading is multilateral and decentralized, which means banks need to invest a lot of capital to handle such transactions. Societe Generale, Citi and Scotiabank are all participating in the trial.

Charles Cascarilla, Executive Director at Paxos, said:

“The trial was very successful and we were able to actually engage with customers using a real product.”

He added that more trials would be needed before the service goes live next year.