The Society for Worldwide Interbank Financial Telecommunications (SWIFT) reported that an experimental strategy to lessen the expensive frictions connected with corporate actions had been successfully finished.
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
SWIFT conducted a blockchain-based solution prototype with six top securities industry participants, including Citi, Northern Trust, and American Century Investments, that may lower the cost of informing investors about key business events. A "clear and uniform" perspective of the corporate action process across the investor ecosystem, as well as prompt warnings when modifications or updates take place, were among the cooperative's claimed advantages for the sector.
Publicly traded corporations rely on human processes to inform investors about company activity. Receivers frequently get incomplete or erroneous information as a result of the manual process used to transmit this information. To solve this problem, Symbiont's blockchain platform and SWIFT teamed together to automate and improve corporate action procedures.
Director of Securities Strategies at SWIFT, Jonathan Ehrenfeld, stated:
“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. 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.”
Participants in the experiment provided data extracts from corporate actions, which SWIFT's Translator tool transformed into a format usable by a blockchain system. The information was subsequently posted to a special platform created for the experiment. The six participants used smart contracts to match common data fields and indicate mismatched data during peer-to-peer event comparisons. With the use of composite data on a particular corporate action, a single precise "shared copy" was produced.
Swift's Chief Innovation Officer, Tom Zschach, outlined:
"Our experiments harnessed the power of blockchain technology to give all market participants a single, accurate view of a corporate action event."
Ripple may have been engaged when it was first reported that SWIFT will test a blockchain-based cost-saving solution in collaboration with Symbiont. A 2015 press release indicating that Symbiont has developed a Ripple Gateway for Counterparty served as the inspiration for the concept. Users can transmit XCP, the native token of Counterparty, or any other Counterparty asset over the Ripple Gateway.
Symbiont's CEO, Mark Smith, said:
"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 claims to someday replace cross-border payment methods like Western Union and SWIFT-based bank transfers, a collaboration may soon form. It would be reasonable to assume that SWIFT may work with a reputable cross-border payment system like Ripple once it finally embraces the power of blockchain technology.
