Axoni and a working group of fifteen of the leading sell-side and buy-side firms in the equity swaps market, have launched a distributed ledger network to manage equity swap transactions. The milestone was marked by the first live trade data processed between Citi and Goldman Sachs on the network built on AxCore, Axoni’s distributed ledger software.
Growing demand for equity swaps has led to substantially more data and value relying on legacy processes and infrastructure. Most equity swaps are executed directly between counterparties. Each counterparty maintains their own books and records to represent the initial trade terms and track any changes through the lifecycle of the trade, where active volumes can number in the millions per firm. Data breaks between counterparties are frequent, leading to substantial operational costs from manually reconciling records against one another.
A multi-year effort led by Axoni and bolstered by substantial cooperative efforts from the working group has now resulted in a distributed infrastructure that enables both sides of an equity swap to be synchronized throughout their lifecycle, communicating changes to each other in real time. Carl Forsberg, Head of OTC Markets at Axoni said, “Axoni is thrilled to see this network coming alive and being used in production by our partners. The level of collaboration across firms on this initiative to drive feature roadmaps and standards has been impressive, the outcome of which is poised to have a substantial impact on post-trade processing across the industry.”
Puneet Singhvi, Head of Financial Market Infrastructure and Lead for Blockchain, DLT and Digital Assets at Citi mentioned, “This is a significant milestone which reinforces our commitment to embracing technology to solve real challenges faced by the industry. The platform, using smart contracts, will enable significant efficiencies while mitigating risks in post trade processing of equity swaps.”
Brian Steele Managing Director, Global Head of Market Solutions at Goldman Sachs, said, “Goldman Sachs continues to embrace new technology solutions which enhance our front-to-back client experience and deliver operational efficiencies. We are excited to be working with innovative tech companies like Axoni, and our industry partners, to develop post-trade solutions which automate business processes and synchronize data on common infrastructure.”
As part of the initiative, the participating firms also collaborated to create and implement a standardized representation of equity swaps throughout their lifecycle, including initial trade confirmation, cash flows, amendments, and corporate actions.
Ian Sloyan, Director, Market Infrastructure and Technology at ISDA said, “Our ongoing work with Axoni will help ensure the system data representation is functional with the ISDA Common Domain Model (CDM) and actively contributes to the continued expansion of equity swap events in the ISDA CDM.”