TCS Using Quartz Blockchain to Power Cross-Border Securities with Real-Time Settlements

By Kapil Gauhar

Tata Consultancy Services or TCS, a leading IT services company, promises to revolutionize the world’s first cross-border securities settlement that reduces currency risks and enhances liquidity in the long run.

This announcement by the consulting and business solutions company has made it clear that this is going to be the world’s first successful cross-border flows settlement between Maroclear and Kuwait Clearing Company. This is to be made successful by using cash coins on the BaNCS network, which is powered by Quartz Blockchain.

BaNCS Network’s Take on It

Opening up access to new business lines, services and markets across geographical boundaries, BaNCS Network helps customers across banking, custody, market infrastructure and insurance domains to collaborate seamlessly connecting to a single ledger and access services on a real-time basis.

It is a private permissioned blockchain ecosystem that includes functions for universal banking, payments, core banking, forex and money markets, wealth management, insurance, compliance, custody, securities processing, Islamic banking, financial inclusion and treasury operations. Also, modules are dealing with capital markets as well as insurance business.

Quartz’s Smart Solution for Cross-Border Settlements

A set of values and fixed income securities from both the Moroccan and Kuwaiti markets were made on the BaNCS Network in the tests run by the two CSDs. The test was conducted on Quartz Blockchain, alongside segregated records to hold these securities.

Quartz’s Smart Solution for Cross-Border Settlements proved to be highly beneficial in cross-border settlement instructions for these securities coordinated and settled immediately on the blockchain ledger. The associated notifications on the transaction status were published on the BaNCS Network and quickly made available to the individual CSDs.

These transactions were settled by using cash coins held in the Quartz Blockchain in a true DVP (Delivery Versus Payment) settlement model.

Cash Coins: What Are They?

Cash coins are a type of virtual currency pegged to a fiat currency at a particular market rate. They are maintained on a private, permissioned blockchain network, such as BaNCS Network to enable seamless and real-time DVP settlement of cross-border transactions.

An immediate settlement significantly reduces the currency risk associated with such transactions at present, emerging out of exchange rate fluctuations amid the time it takes to settle. This settlement model can significantly reduce the liquidity requirements for members, while additionally diminishing settlement risks.

Fathia Bennis, Maroclear CEO, said –

“We have demonstrated that by using disruptive technologies like Blockchain, we can overcome limitations in prevailing business models and create new business opportunities for our customers. With our strategic vision of providing innovative technology solutions to our financial markets, we have expanded our decade-long relationship with TCS alongside the capabilities of TCS BaNCS, the BaNCS Network and Quartz Blockchain solutions in exploring new operational opportunities to enable the cross-border settlements landscape in the Moroccan and African markets.”

Khaldoun Altabtabaie, the CEO of Kuwait Clearing Company, commented on the success of this new approach to cross-border securities settlement –

“At KCC, we want to be at the forefront of innovation in Kuwait and the region, which is a key factor in fulfilling our ambitious strategy to develop the market. Along with managing and implementing the post-trade market transformation plans, we explored blockchain technology in order to introduce new services and operational efficiencies in the financial market. The seamless integration of the Market Infrastructure solution from TCS BaNCS with Quartz Blockchain now opens up new opportunities for us to explore the usage of Blockchain in the Kuwaiti market.”

R Vivekanand, the co-head and vice-president of TCS Financial Solutions, said –

“The BaNCS Network has been created by TCS to leverage the power of Blockchain to deliver exponential value from ecosystems, a part of TCS’ Business 4.0™ vision. We are pleased to see our TCS BaNCS customers, Maroclear and Kuwait Clearing Company, leverage this capability, vindicating our commitment to provide sustained long-term value and innovation to our customers. The real-time cross-border settlement with cash coins reduces risks, costs and has the potential to create enhanced liquidity in markets in the Middle East and Africa.”

Final Take

TCS’ BaNCS for Market Infrastructure is a sort of multi-asset class solution mainly designed for high-performance transaction management. The solution underpins end-to-end trade as well as post-trade functions, including settlement, trade matching, surveillance, risk and collateral management, issuance, unified clearing, registry and depository functions around a standard reference data layer.