Vanguard Group, a mutual fund behemoth, recently started using blockchain solutions for the forex market. It has partnered with Symbiont to facilitate the trades.
A new beginning in the forex markets
The forex market handles over $6 trillion worth of transactions every day, and Vanguard wants blockchains to help facilitate these trades. The mutual fund giant has now partnered with New York based startup Symbiont. Sources suggest that the forex product from the six-year-old startup has already been working on some forex trades since August this year. Vanguard tested the solutions for two months before going public with the partnership. With this new offering, the company may try to challenge global banks that dominate the forex markets.
Symbiont provides blockchain-based solutions to institutional clients. Nasdaq Ventures has invested $20 million into the company, which is working with Ranieri and Citi apart from Vanguard. The company suggests that using blockchains has helped it in reducing the cost of forex trade settlements. Though it did not provide the exact amount of savings, the company was able to make. However, it insisted that since most internal transaction flows will be settled on the blockchain system in the upcoming years, the cost savings will be significant.
Global head of forex trading at Vanguard, Andy Maack said,
“There’s a tremendous amount of interest in the potential for disintermediation.”
What is Vanguard planning?
The asset management company will be providing its blockchain based tools to its corporate clients. It is expected to focus less on spot trading and pay attention to swaps and forward markets instead. It wants forex asset managers to use distributed ledger technology to reduce their costs and create a more reliable peer-to-peer trading solution. This system will be completely devoid of investment banks.
However, a former forex trader for Deutsche Bank said that this system would need a larger number of users to bring any cost-saving advantages to the users. However, he noted that the savings made by avoiding large investment banks could be very impressive. It must also be noted that financial institutions have still not opened up to blockchains on a large scale.