CLS Exec Says Blockchain Not Essential To FX Trading Tool

CLS Group, a financial institution providing foreign exchange settlement solutions, has acknowledged that blockchain is not necessarily critical to improving FX trading, despite having invested heavily in the technology.

Reports in Coindesk on Tuesday (Oct. 8) said CLS Group Chief Strategy and Development Officer Alan Marquard acknowledged that “blockchain is not essential” for the firm’s CLSNet solution to run, “or even to run well.” He noted that he has been adamant from the beginning of CLS Group’s blockchain endeavors that the technology is not a requirement to operate the tool.

CLSNet was launched last year as “the first global FX market enterprise application running on blockchain in production.” Major financial institutions including Goldman Sachs and Morgan Stanley signed up for the tool, developed on Hyperledger Fabric.

According to Marquard, any technology that provided “a centralized way of doing the calculations and pushing them back out” could have been just as useful to the CLSNet solution. However, he emphasized that CLS Group is “pro-blockchain” and pointed to blockchain’s ability to ensure that all participants on a network have access to the same version of calculations at the same time. He said this is crucial for emerging market currencies.

“The more we drive netting into those currencies, the more people will save,” he said. “So the service will save people money. Is that because of blockchain? No, I don’t think that, hand on heart, I can say that.”

Nine banks so far have signed up for the CLSNet solution, five of which are now live on the platform and the remaining four in the final stages of testing.

Marquard added that he remains skeptical about blockchain’s promises for the financial services space.

“The big thing blockchain was going to do was the transfer of value, of money and assets, and get rid of all the payment systems,” he told the publication. “It was just silly. It was a technologist’s view of how markets function with very little understanding of those kinds of entities and how they operate.”