HSBC will launch a blockchain-based solution to enable shareholders to access stock details in real-time. Focusing on private placements, the bank expects to move $20 billion of assets into the Digital Vault by March 2020.
The exercise aims to digitize a currently paper-based approach. Overall HSBC custodies $50 billion worth of these types of assets. That’s a tiny fraction of the $7.4 trillion in total assets that HSBC looks after. Although HSBC Securities Services is one of the top ten global custodians, it lags behind BNY Mellon with $34.5 trillion under custody.
Two weeks ago HSBC Singapore announced a blockchain trial with the Singapore Exchange (SGX) and state-owned Temasek for servicing fixed income securities.
While HSBC may be a top ten custodian, it claims the number one spot for global trade finance, which is the focus of its most significant blockchain initiatives. It’s one of the key drivers behind the Letter of Credit blockchain (formerly known as Voltron). The consortium which digitizes the legacy trade finance process consists of eight global banks. These include Bangkok Bank, BNP Paribas, CTBC Holding, ING, NatWest, SEB and Standard Chartered. The initiative is expected to go into production soon.
While Letters of Credit tend to be used for larger transactions, at the other end of the spectrum, HSBC is also a participant in we.trade, a European trade finance initiative catering for SMEs. We.trade is in production and signed an agreement with eTradeConnect, yet another blockchain trade finance project, this time orchestrated by the Hong Kong Monetary Authority. HSBC is a participant here as well.
The bank has also made some blockchain startup investments. Despite being an early participant in the Utility Settlement Coin initiative involving central bank tokenized money, HSBC decided not to invest in Fnality when the project incorporated.