Atomic Settlement for FX Trades

By settling in seconds instead of days (T+2), trillions in trapped pre-funding capital and nostro account balances are freed for productive use. This drastically reduces liquidity costs and banking fees. A 2023 BIS report estimated potential annual savings of over $100 billion in global banking costs from atomic settlement.

• Cost Breakdown: Savings come from eliminating nostro account fees, reducing failed trade penalties, and lowering operational overhead for reconciliation and dispute resolution.

Every atomic transaction is immutably recorded on a shared ledger, creating a single source of truth. This automates regulatory reporting (e.g., MiFID II, AML) and provides real-time visibility for internal audit. Manual reconciliation—a major cost center—is eliminated.

• ROI Driver: For a multinational, this can reduce the compliance team's workload on FX by over 50%, while providing regulators with transparent, tamper-proof records on demand.

Blockchain networks operate beyond traditional banking hours. This allows corporate treasuries to execute and settle FX hedges or payments in real-time, 365 days a year, responding instantly to market movements or urgent liquidity needs. This transforms treasury from a batch-processing function to a strategic, real-time liquidity manager.

• Use Case: A tech company can now convert overseas revenue to local currency the moment it's received, even on a weekend, minimizing volatility exposure.

Replace the vulnerable 2-day T+2 settlement window with Delivery vs. Payment (DvP) on a shared ledger. This atomic settlement ensures the currency payment and receipt are a single, irreversible event.

• Key Benefit: Zero counterparty default risk during settlement.
• Real-World Impact: Mitigates the "Herstatt Risk" scenario, where one party delivers currency but the counterparty fails. This is a primary concern for regulators (e.g., Bank for International Settlements).
• Example: A pilot by J.P. Morgan's Onyx demonstrated atomic settlement for intraday repo trades, proving the model reduces capital requirements tied to settlement exposure.

Atomic settlement directly shrinks your balance sheet footprint. By collapsing the settlement cycle, you release capital trapped in nostro accounts and slash associated costs.

• Key Benefit: Up to 80% reduction in pre-funded nostro liquidity requirements.
• ROI Driver: Eliminates fees for correspondent banking, overnight financing, and reconciliation. A CLS Group study estimates industry-wide savings of $3-4 billion annually from compressed settlement times.
• Operational Gain: Real-time visibility into settled positions improves treasury management and reduces operational hedging costs.

Implement a single, immutable record of truth for both trading counterparties. This automates the most labor-intensive and error-prone post-trade processes.

• Key Benefit: Near-elimination of trade fails and reconciliation disputes.
• Process Efficiency: Straight-Through Processing (STP) rates approach 100%. Teams shift from manual exception handling to oversight.
• Audit & Compliance: Provides an immutable, timestamped audit trail for regulators (e.g., MiFID II, Basel III). HSBC and Wells Fargo highlighted this automated transparency as a key outcome in their shared ledger forex settlement experiments.

Track tangible KPIs from day one to build your internal business case for scaling.

• Capital Efficiency: Nostro Account Balances (USD)
• Cost Savings: Settlement & Reconciliation FTE Hours / Correspondent Banking Fees
• Risk Reduction: Trade Fail Rate (%) / Settlement Exposure (USD)
• Operational Speed: Average Settlement Time (T+?)

Example Benchmark: Early adopters in project Regulated Liability Network (RLN) pilots target reducing settlement risk capital charges by over 50% while cutting operational costs by ~30%.