Successful Tests by Maroclear and Kuwait Clearing Company, using Cash Coins on Tata Consultancy Services’ BaNCS Network Promises to Revolutionalize Cross-Border Flows with Real-time Settlements that Reduce Currency Risks and Enhance Liquidity
Tata Consultancy Services (TCS) has confirmed the world’s first successful cross-border securities settlement between two central securities depositories (CSDs) – Maroclear, the CSD of Morocco, and Kuwait Clearing Company, the CSD of Kuwait – using cash coins on the BaNCS Network, powered by Quartz Blockchain.
“Along with managing and implementing the post trade market transformation plans, we explored blockchain technology in order to introduce new services and operational efficiencies in the financial market,” said Khaldoun Altabtabaie, CEO, Kuwait Clearing Company.
The BaNCS Network is a private permissioned blockchain ecosystem through which the 450 TCS BaNCS customers across banking, market infrastructure, custody and insurance domains, can collaborate by seamlessly connecting to a single ledger and accessing information and services on a real-time basis. This can open up access to new markets, services and business lines across geographical boundaries.
In tests run by the two CSDs, a set of equities and fixed income securities from both the Kuwaiti and Moroccan markets were created on the BaNCS Network implemented on Quartz Blockchain, along with segregated accounts to hold these securities. The cross-border settlement instructions for these securities were matched and settled instantaneously on the blockchain ledger using Quartz’s Smart Solution for Cross-Border Settlements. The associated notifications on the status of transactions were published on the BaNCS Network and instantaneously made available to the respective CSDs. These transactions were settled using cash coins held in the Quartz Blockchain in a true delivery versus payment (DVP) settlement model.
“We have demonstrated that by using disruptive technologies like Blockchain, we can overcome limitations in prevailing business models and create new business opportunities for our customers,” said Fathia Bennis, CEO, Maroclear. “With our strategic vision of providing innovative technology solutions to our financial markets, we have expanded our decade-long relationship with TCS alongside the capabilities of TCS BaNCS, the BaNCS Network and Quartz Blockchain solutions in exploring new operational opportunities to enable the cross-border settlements landscape in the Moroccan and African markets,” he added.
Cash coins are a form of digital currency pegged to a fiat currency at a fixed market rate and are maintained on a private, permissioned blockchain network. Cash coins in a blockchain network enable seamless and real-time DVP settlement of cross-border securities transactions. Instantaneous settlement significantly reduces the currency risk associated with such transactions at present, arising out of exchange rate fluctuations during the time it takes to settle. Analysts say this settlement model has the potential to significantly reduce liquidity requirements for participants, while also decreasing settlement risks.
“Real-time cross-border settlement with cash coins reduces risks, costs and has the potential to create enhanced liquidity in markets in Middle East and Africa,“ said R Vivekanand, Vice President and Co-Head, TCS Financial Solutions.