Earlier this week, Nikkei news reported that SBI Holdings is using distributed ledger technology for foreign exchange margin transactions within the group. The company says this is the first use of R3’s enterprise blockchain Corda in Japan.
SBI is both an investor in R3 and also owns SBI R3, which promotes Corda technology in Japan. Two months ago, SBI entered into discussions with SMBC about investing in SBI R3.
Apart from demonstrating Corda in the country, the purpose of the foreign exchange platform is to reduce reconciliations. Typically, when a forex transaction is executed, the person would check emails to confirm the transaction is as requested and settled. Whereas now, there’s no need for email because the ledger records the detail. It also should reduce the potential for human error.
SBI Securities holds foreign exchange balances because it provides trading in foreign bonds and stocks. But it also needs to hedge the forex risks, which is done with banks and the foreign exchange market. However, within the group that hedging role is executed via SBI Liquidity Market. Hence, the need to share data.
The plan is to extend the use of the forex application to other group companies apart from SBI Securities, and potentially to external firms.
SBI’s blockchain credentials
SBI is prolific in the blockchain sector. Apart from investing in R3, it also has a stake in Ripple, and a joint venture SBI Ripple. Additionally, in Japan there’s the MoneyTap payments app based on Ripple technology that is led by SBI.
Four months ago, SBI formed a joint venture with Chinese AI and blockchain firm OneConnect to target Japanese banks. OneConnect was started by China’s Ping An insurance and is now listed on the NYSE.