JP Morgan, Citibank and other 8 financial institutions completed smart contract prototypes to test equity derivatives transactions

Eight financial firms have successfully completed testing of a smart contract prototype developed by blockchain startup Axoni.

A total of five banks, two financial architecture firms and a consulting firm are involved in the project: JP Morgan, Credit Suisse, Barclays, Citi, Markit, Thomson Reuters and an undisclosed bank.

The project took a month to test the processing of股权互换（equity swaps） . The entire test process was handled by Axoni, which fully demonstrated that the New York company's software is capable of handling complex post-trade services such as margin payments and shareholder decision-making issues. In addition, this project can also replace the existing time-consuming full-process management process to easily complete the swap of stocks, financial indicators and portfolios.

Axoni has already launched two multi-party blockchain prototypes this year, and the smart contract project is a further boost for the startup.

Axoni CEO Greg Schvey said the project demonstrated that blockchain could handle more complex post-trade asset services while improving system efficiency.

The complex contracts, decentralized market structure, and cumbersome workflows in the industry have given blockchain technology an opportunity to shine. Blockchain and equity derivatives trading are a perfect match.

The project represents the development trend of the industry and will help promote blockchain from simple technical prototypes to real use cases.

Diverse data sources

Thomson Reuters integrated its ETH custodial wallet BlockOne with Axoni’s software to conduct an over-the-counter (OTC) test of equity swaps. Through this integration, Thomson Reuters successfully obtained relevant valuation and market data, including equity pricing and LIBOR (London Interbank Loan Rate) rates.

The smart contracts were generated using the MarkitSERV processing platform from information analytics company IHS Markit, providing banks with a synchronized, detailed record of transactions.

In order to improve the professionalism of the project, Axoni also invited business and technology consulting company Capco to participate in the entire process management to fully simplify the workflow.

Benjamin Jessel, Head of Blockchain at Capco, said:

The smart contracts used in this project are more complex than in the past.

It is reported that the project has undergone 133次structured tests to evaluate the capabilities of blockchain technology in equity derivatives trading, with a success rate of 100% .

In addition to testing the functionality of smart contracts, the working group also conducted 50 large and small tests on Axoni’s core architecture.