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Citi, Goldman Sachs Conduct First Blockchain Equity Swap On Ethereum-Inspired Platform

After investing in blockchain startup Axoni, Citigroup and Goldman Sachs, on January 28, 2020, ... [+] conducted the first-ever equity swap on a blockchain built with tools originally designed for the public ethereum blockchain. LightRocket via Getty Images

On Tuesday, January 28, 2020, Citigroup and Goldman Sachs quietly conducted what some will consider a historic transaction: the first equity swap on a new blockchain built using tools originally designed for ethereum. While this first transaction, a total return swap in which one bank agreed to make a payment based on the returns of an underlying asset, and the other based on a set rate, involved only the two counterparties, another 13 are waiting in the rafters. Unlike more traditional equity swaps, which have to be constantly updated for countless variables, including end-of-day market prices, corporate actions like stock splits or dividend payments, and variable interest rates, the new equity swaps platform, powered by venture-backed blockchain startup Axoni’s technology, assures that every counterparty in every swap is seeing, and using, the same data.

With trillions of dollars in equity swaps being conducted around the world last year, financial giants like Citi and Goldman Sachs have to employ small armies to constantly check—and cross-check—every step of the process until the swap comes to maturity, sometimes months later.  When things go wrong, when the numbers at one bank don’t match the numbers at another, those armies can lose days of work and millions of dollars on each transaction. “When there is a break, and it could be something as silly as keying the wrong payment dates and accruing interest differently, each party has to go back into their data sets and spend hours or days digging through huge, huge chunks of data,” says Greg Schvey, 33, Axoni cofounder and CEO. “And now we can show you that instantly and in a way that both parties have full visibil...

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