Settlement using blockchain to Automate Foreign Exchange in a Regulated environment (SAFER)

Lead Participant: Tramonex Ltd

Abstract

While forex is essential for businesses, SMEs are pushed out of the market due to the
financial crisis and resulting high compliance fees. Banks now consider SMEs too risky for
forex, limiting capacity for UK SMEs to trade outside the UK. SMEs with forex turnover of
less than £1m are now being refused services, forcing most SMEs to use small (Tier 2) banks
who charge as much as 10% commission on each transaction.
Because forex systems in large banks require large teams of people, they are expensive to
operate, thereby often requiring min. £50K per transaction and charging as much as 10%
commission on each transaction. These services are opaque about charges/costs and
inefficient (often taking 1 to 5 days) due to the number of intermediaries involved. Because
forex conversions are not simultaneous, participants are vulnerable to settlement risk
(Herstatt), further increasing forex costs.
Blockchain is emerging as the standard for transferring value, lead by NY introducing first
bitlicense in Aug 2015 and Nasdaq group announcing use of blockchain for share trading in
May 2015. Tramonex’s blockchain system will enable highly efficient forex transactions
(approx. just 10 mins) and provide SMEs with a broad range of currencies at low cost.
Tramonex, an established online forex and payments platform for SMEs, has developed a
proof of concept blockchain settlement system for foreign exchange. In this project,
Tramonex will, establish a prototype for blockchain settlement and demonstrate to the FCA
(Financial Conduct Authority) and other regulatory authorities for approval.
The Tramonex platform will operate much more quickly than other systems, with
significantly lower fees. Tramonex will be fully automated and transparent, so users will
know the exact commission charges. The platform will also perform automated identity
checks, to fulfill anti-money laundering regulation compliance.

Lead Participant

Project Cost

Grant Offer

Tramonex Ltd, LONDON £551,131 £ 248,009

Publications

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