Thomson Reuters is joining a consortium that includes some of the largest financial institutions around the world working to determine how to use blockchain technology in global financial markets.
Blockchain technology is behind bitcoin, the popular digital currency, and enables data to be shared between a network of individual computers. It’s gaining in popularity because it is proving to be useful in recording and tracking assets. The consortium, dubbed R3, consists of more than 55 banks and other financial institutions, but Thomson Reuters is the first data and technology provider to come on board.
“There are 50 financial institutions that are already members of R3, and they are all clients of ours,” said Mark Rodrigues, managing director of strategic customers and solutions at Thomson Reuters in New York, in a report. “We believe strongly in collaboration with clients, specifically client-led innovation.”
A particular interest to Thomson Reuters in joining this consortium is exploring the use of blockchain in the company’s trade finance business, which it says lacks data standards. It’s also interested in exploring blockchain for foreign exchange clearing and settlement.
“There’s linkage between cash and FX swaps and futures, but it’s very imprecise right now,” said Rodrigues. “If we have data standards and distributed ledgers, you could eliminate a tremendous amount of capital reserves and risk capital that get used up in this process right now.”
While its financial businesses are a natural place to explore blockchain, Thomson Reuters isn’t stopping there. The company said it will look at blockchain applications for its legal and tax businesses, which have been working on their own initiatives for more than a year. Thomson Reuters has blockchain labs located in New York and London. The company operates currency trading platforms that had an average daily volume of foreign exchange trading totaling $394 billion in June.