Swift successfully tests blockchain for business transactions
And this is a growing challenge
Fast data shows that corporate transaction volumes have doubled since the Covid-19 pandemic. And according to a recent study by The ValueExchange with support from ISSA, inefficiencies in communicating about corporate actions cost each market participant an average of $3-5 million a year.
“Our analysis found that asset managers often receive alerts from up to 100 different sources about the same corporate event, and the data is often different or conflicting from one source to another,” said Jonathan Ehrenfeld, Securities Strategy Director at Swift. “This means asset managers have to manually sift through the various sources to get a single view of the event before they can make the necessary decisions.”
Our corporate actions pilot explained
As part of our strategy to enable instant and frictionless transactions globally, we identified the need to tackle this pain point in the securities industry and find a new approach to processing corporate actions – one capable of reducing data errors, removing manual intervention and reduce costs significantly. for market players.
So, in line with our collaborative approach to innovation, we brought together six key managers and asset managers to trial a peer-to-peer matching solution to bring clarity to some of the most complex events – such as tender offers, full calls, shares. splits and Dutch auctions – it can often lead to ambiguity.
With sensitive account numbers and balances redacted, participants provided excerpts of Swift MT 564 messages for the selected event types. Swift’s translator tool was used to convert the data into a blockchain-readable format, which was uploaded to a dedicated platform developed for the pilot.
Participants then performed peer-to-peer event comparisons, with smart contracts matching common data fields and flagging unmatched exceptions. A single, exact “split copy” was then generated with composite data about the relevant corporate action.
“Our experiments harnessed the power of blockchain technology to provide all market participants with a simple, accurate picture of a business transaction event,” explains Tom Zschach, Chief Innovation Officer at Swift. “We will now work closely with our community to assess all the features needed to develop a scalable, industry-wide solution to this long-standing problem.”
