HSBC builds tokenised deposit-based treasury management capabilities
HSBC has successfully tested the use of tokenised deposits in intra-group payment transactions together with Ant Group. This initiative, the first of its kind in Hong Kong, aims to explore the potential of deposit tokenisation in enabling always-on, real-time treasury fund movement between accounts held by a corporate within the HSBC network.
Conducted under the Hong Kong Monetary Authority's Fintech Supervisory Sandbox arrangement, the test encompassed the issuance, transfer, and redemption of deposit tokens. It will pave the way for future research on how blockchain and tokenisation can drive efficiencies and foster innovations in corporate treasury management.
During the test, HSBC was connected to the blockchain platform developed by Ant Group. The platform, supported by Ant Group’s banking partners, enhances treasury fund transfer with improved turnaround time, cost efficiency, and visibility.
Since 2020, HSBC has supported Ant Group's blockchain-based real-time treasury management solution. It facilitates treasury payments across global treasury centres, supporting major currencies, including HKD, CNY, USD, GBP, and EUR.
HSBC has been involved in various central bank digital currency (CBDC) and tokenised deposit projects, participating in successful pilots, including Project mBridge, which utilised CBDCs for cross-border wholesale transactions, and a cross-border CBDC payment orchestration pilot organised by Swift. Additionally, it took part in proof-of-concept projects that explored the feasibility of an interoperable digital money platform known as the regulated liability network in the US and UK.
The bank says it will continue to expand its tokenisation capabilities, explore new use cases for tokenised deposits and share best practices with other markets.
SIX and Swiss National Bank pilot wholesale CBDC issuance in Switzerland
Switzerland is taking a significant leap forward with the collaborative efforts of financial market participants to develop the digital financial markets of the future. SIX, the Swiss National Bank (SNB) and six commercial banks will collaborate on a pilot focused on tokenised central bank money for financial institutions (wholesale central bank digital currency or wCBDC).
This pilot, Helvetia Phase III, will, for the first time, see the orchestration of a real Swiss Franc wCBDC settling digital securities transactions. SIX Digital Exchange (SDX) will act as a trusted gateway and will host the pilot on its digital asset platform. The pilot builds on the findings of earlier Helvetia phases by the BIS Innovation Hub, the Swiss National Bank (SNB) and the financial infrastructure operator SIX (Helvetia Phase I and II).
The collaboration will involve Banque Cantonale Vaudoise, Basler Kantonalbank, Commerzbank, Hypothekarbank Lenzburg, UBS, and Zürcher Kantonalbank as existing SDX member banks. In addition to the SDX platform, the pilot uses the infrastructure of Swiss Interbank Clearing SIC, which is operated by SIX and SIX SIS, the national Central Securities Depository (CSD) of the Swiss financial market and an International Central Securities Depository (ICSD). The pilot will run from December 2023 to June 2024.
The pilot's objective is to test, in a live production environment, the settlement of primary and secondary market transactions in wCBDC. Participating banks can issue digital Swiss franc bonds, which will be settled against wCBDC on a delivery-versus-payment basis. Project Helvetia Phase III will also extend to the settlement of repo transactions, which are initiated on the CO:RE trading platform of SIX Repo and administered by the Triparty Agent of SIX SIS. These transactions, conducted in test environments, will be collateralised by digital bonds eligible for SNB repo transactions and settled on SDX in wCBDC.
HKMA publishes report on phase 1 of the e-HKD pilot programme
The Hong Kong Monetary Authority (HKMA) has published the “e-HKD Pilot Programme Phase 1 Report” to discuss the key findings, learnings, and assessment of 14 pilots conducted by the 16 participating firms under Phase 1 of the e-HKD Pilot Programme. The report also sets out the next steps of the e-HKD Pilot Programme.
The pilots under Phase 1 showed that an e-HKD could add unique value to the current payment ecosystem in Hong Kong in three main areas: programmability, tokenisation, and atomic settlement. An e-HKD has the potential to facilitate faster, more cost-efficient, and more inclusive transactions. It can also enable new types of economic transactions. However, the HKMA recognises that these pilots are conducted on a small scale in a controlled environment. Further investigation and evaluation are required to determine if these benefits can be realised at a larger scale in real-life applications.
The HKMA has not yet decided on whether and when to introduce an e-HKD. The outcomes and insights gained from Phase 1 of the e-HKD Pilot Programme will help enrich the HKMA’s perspective and refine its approach to the possible implementation of e-HKD. The next phase of the programme will seek to explore new use cases for an e-HKD and delve deeper into select pilots from Phase 1.
“Phase 1 of the e-HKD Pilot Programme has examined many innovative use cases of an e-HKD and has provided valuable insight to the HKMA on how an e-HKD can potentially add tangible value to businesses and consumers,” said Eddie Yue, Chief Executive of the HKMA. “These pilots have also raised a number of areas for future study.”
Fund managers are prioritising FX hedging despite lower volatility
A report from MillTechFX has revealed that three-quarters of UK fund managers hedge their currency risk, and out of those that do not, 95% are considering doing so, given market uncertainty.
The MillTechFX UK CFO FX Report 2023: The intensifying challenges for fund managers found that although volatility has decreased since peaking towards the end of 2022, the share of fund managers hedging a large proportion of their FX exposure grew from 46% in 2022 to 56% in 2023. Similarly, the average hedge ratio was between 40-49%, with nearly seven out of ten (68%) fund managers citing this as higher than last year.
Despite the recent calming of market volatility, currency movements are still having a significant impact on fund managers and out of those surveyed, 77% said their returns have been affected by GBP volatility. Three-quarters believe that the cost of hedging has increased over the past year.
Looking ahead, many fund managers are still prioritising risk management, with over half planning (51%) to increase their hedge ratio and 50% preparing to increase their hedge window over the next 12 months.
CQUR Bank selects Finastra for corporate digital transaction banking offering
CQUR Bank has partnered with Finastra to implement its Trade Innovation and Corporate Channels. This will allow the bank to offer its corporate clients a new online banking portal for a seamless user experience, introduce new digital workflows and provide host-to-host integration solutions.
Corporate Channels is a digital banking platform that provides CQUR Bank with a single, intuitive portal to unify trade, cash, supply-chain finance, lending and treasury services for its corporate clients. Trade Innovation is an end-to-end solution for frictionless trade and supply chain finance. The trade services platform uses straight-through processing, digitisation and data analytics that will support the bank’s growth and its ability to evolve with new demands.
“To truly meet the complex demands of our customers, we needed to upgrade our online banking solution to deliver greater connectivity, faster onboarding experiences and access to sophisticated trade finance services that accelerate growth,” said Justin Kenny, Chief Operating Officer at CQUR Bank.
GTreasury adds data integrations with HSBC
GTreasury’s ClearConnect Gateway has launched new and instant financial data integrations with HSBC. Treasury teams and the office of the CFO can now use the platform to access current-day balance and transaction reporting and prior-day balance and reporting from their organisations’ HSBC accounts.
ClearConnect Gateway replaces enterprises’ legacy banking connections with seamless API connectivity and data integration into their preferred banking partners. The solution is designed to enable treasury teams to use API connectivity for real-time synchronisation with banks, ERPs, and third-party platforms.
“The ClearConnect Gateway gives treasury teams and the office of the CFO access to a cutting-edge API-connectivity solution—putting the exact account information they need right at their fingertips, whenever they need it,” said Victoria Blake, Chief Product Officer, GTreasury. “The ability to access real-time balance and transaction data is increasingly critical in today’s economy, and we’re thrilled to add HSBC into our quickly-expanding ClearConnect Gateway ecosystem.”
BillingPlatform and J.P. Morgan Payments form strategic alliance
BillingPlatform has announced a strategic partnership with J.P. Morgan Payments to support billing needs across its business units. BillingPlatform’s solution has been integrated within J.P. Morgan’s ecosystem to more efficiently service J.P. Morgan’s Treasury Services and Trade Finance businesses.
As part of J.P. Morgan’s broader billing and pricing transformation, the integrated solution aims to expand billing capabilities as well as meet increasing market needs. This implementation should enable flexible billing configurations, workflow automation and strategic integrations to achieve end-to-end processing.
“Our partnership with BillingPlatform provides us with a configurable solution that fits into our broader revenue lifecycle ecosystem to help us meet our complex billing needs, initially for our Treasury Services and Trade Finance business,” said Jill Jensen, Managing Director of J.P. Morgan Payments Technology.
Barclays launches online service for business founders to connect with investors
Barclays has launched the Demo Directory, a free online service open to UK businesses, regardless of who they bank with, for easy, cheaper and less time consuming access to capital by connecting them to a network of attested investors.
The service aims to help businesses seek investment opportunities they previously may not have explored, which could help them through a challenging trading environment or be used to grow their business. Barclays research reveals that two-fifths (42%) of founders surveyed would use investment to expand their product and service ranges, 33% would hire more staff, and nearly the same amount would expand or upgrade their premises (32%).
Barclays Demo Directory allows investors to sign up and review a directory of video pitches and answers to elevator pitch-style questions with founders showcasing their businesses. Investors can search for investment opportunities by filtering businesses, for example, by region or business size. Barclays Demo Directory service connects investors directly with any founders they want to explore further to discuss funding opportunities.
However, the research also found that economic uncertainty impacts funding plans, as almost a quarter (24%) of founders surveyed report that they have postponed a funding round due to the current economic environment. This is despite the same number (24%) saying additional funding would help their business to manage bill increases and almost three in ten (27%) saying this would help with cashflow challenges due to the cost-of-living crisis.
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