HSBC Exec Says Using Blockchain Slashed Forex Trading Costs by 25%

An HSBC executive has said that the bank’s blockchain-based system has helped it cut the costs of settling foreign exchange trades.

Speaking to Reuters, Mark Williamson, chief operating officer of FX cash trading and risk management, who oversees the blockchain project, said that its HSBC FX Everywhere platform saved it 25 percent as compared with traditional methods.

Last month, the bank announced it had settled more than $250 billion in transactions using its HSBC FX Everywhere platform.

It said then that it had settled 3 million foreign exchange transactions and made a further 150,000 payments over the digital ledger system, which it has been using over the last year “to orchestrate payments across HSBC’s internal balance sheets.”

In the Reuters report, Williamson said that HSBC processes from 3,500 to 5,000 trades a day on FX Everywhere, with trades now being worth $350 billion.

“We’re able to demonstrate that this is not a one-off proof of concept or just one or two trades,” Williamson said.

Reuters further quoted him as saying that a “significant” amount of internal money flows are likely to be settled on the DLT system.

HSBC has been experimenting wit blockchain for some time. Since joining blockchain consortium startup R3 in 2015, it has teamed up with Bank of America and the Singapore government on a blockchain supply chain trial

It’s also joined work on the Utility Settlement Coin (USC) project, designed to make it easier for global banks to conduct a variety of transactions with each other using collateralized assets on a custom-built blockchain.


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Author: Daniel Palmer
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Does Bank of America’s Crypto Custody Show Irrelevance of Bitcoin ETFs?

This week, $312 billion Bank of America (BoA) filed a patent to offer crypto custody, targeting large-scale institutional investors and retail traders.

Some experts have said that the efforts of major financial institutions to create institutional products around cryptocurrencies will bolster the adoption of crypto in US markets, which will naturally lead to other publicly tradable instruments such as Bitcoin exchange-traded funds (ETFs).

LIONBIT

Bitcoin ETFs Not Necessary?

The patent of BoA, filed with the US Patent and Trademark Office, described a vault system with which institutions can safely store digital assets like Bitcoin. It read:

“The processor is also able to deposit the quantity of cryptocurrency into a vault connected to a network and determine a total quantity of cryptocurrency deposited into the vault. The processor may also, in response to determining the total quantity of cryptocurrency deposited into the vault exceeds a threshold, facilitate the disconnection of the vault from the network.”

In essence, the system of BoA is similar to the services offered by Xapo, a Hong Kong-based Bitcoin vault company that has been storing over $10 billion in Bitcoin on behalf of institutions since early 2014.

With such a system in place, BoA will be able to provide a platform for its clients and large institutions in the finance sector to allocate large sums of money into the crypto sector without concerns regarding security and regulation.

BoA stated that the primary purpose of its crypto vault system is to allow enterprises to safely store large amounts of digital assets while being able to conduct transactions on a daily basis.

“Enterprises may handle a large number of financial transactions on a daily basis. As technology advances, financial transactions involving cryptocurrency have become more common. For some enterprises, it may be desirable to securely store cryptocurrency,” BoA said.

In an interview with Forbes, Jonathan Hamel of Acadamie Bitcoin in Montreal explained that the introduction of institutional products around crypto like the BoA custody solution and Bakkt, a joint venture created by Microsoft, Starbucks, and the New York Stock Exchange, will significantly improve the physical over-the-counter (OTC) and institutional infrastructure.

TIP

In the near future, Hamel said that institutions will be able to comfortably invest through existing custodian solutions that are sufficient to bring in billions of dollars in new capital into the space.

As the OTC and institutional market improves, Hamel noted that ETFs and other publicly tradable instruments will inevitably arrive in US markets, emphasizing that investors do not have to be concerned about the approval of ETFs just yet.

“I don’t think (the rejections) are that important. The ‘physical’ over-the-counter/institutional bitcoin infrastructure is only getting started. The development of financial vehicles backed by bitcoin is inevitable. It’s not if, it’s when,” Hamel stated.

Institutional Market is Improving

Currently, the vast majority of investors are highly anticipating the debut of the first Bitcoin ETF because most believe that an ETF would bring in substantial capital into the asset class.

But, officials at the US Securities and Exchange Commission (SEC) have made it clear that there exists certain requirements ETF operators will have to meet and the first Bitcoin ETF is unlikely to emerge in US markets until early 2019.

In the meantime, as Hamel said, investors are still able to invest in the market through custodian solutions and the institutional market improves, more institutions will be willing to consider cryptocurrencies as a legitimate market to invest in as an alternative.


Here at Dollar Destruction, we endeavour to bring to you the latest, most important news from around the globe. We scan the web looking for the most valuable content and dish it right up for you! The content of this article was provided by the source referenced. Dollar Destruction does not endorse and is not responsible for or liable for any content, accuracy, quality, advertising, products or other materials on this page. As always, we encourage you to perform your own research!

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Author: Joseph Young
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Bank of America Is Closing My Three-Year-Old’s Account Over Crypto!

Tim Enneking is the managing director of Crypto Asset Management in San Diego, California. This is his story.

My daughter is 3 years old. Bank of America is closing her bank account on May 4 because of her “risk profile” and, it would appear, her “connection” with the crypto space.
Please let me explain. My management company manages a hedge fund which does indeed routinely invest in the crypto space. Importantly, the management company itself does not trade crypto.
The fund has an account with a bank other than BoA; the management company, my wife and I, and our daughter all have our bank accounts with Bank of America. This has led to some rather curious consequences.

My wife and I opened our joint checking and savings accounts with Bank of America (in La Jolla, CA) about four years ago, well before I founded the management company. We opened a Uniform Transfers to Minors Act (UTMA) account there for our daughter shortly after she was born. We have fifty dollars a month transferred into that account automatically to kick-start her college fund; that is pretty much the extent of the activity in the account.


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There have never been any transfers into or out of my daughter’s account other than with the joint account my wife and I have in the same BoA branch. There certainly has not been any activity even vaguely related to crypto assets in it.

On April 4 of this year, we received notices dated two days prior that Bank of America would restrict our accounts in 21 days and close them in 30.

The management company received three such notices (one for each of its two bank accounts and one for its BoA credit card); my wife and I received three such notices (for each bank account and for my wife’s BoA credit card); and our three-year-old daughter received one notice for her account.
Other than saying that these decisions were “final and won’t be reconsidered,” only the notice canceling the management company’s credit card had any explanation: “because your risk profile no longer aligns with the bank’s risk tolerance” – for a card linked to an account which has had an average six-figure balance since it was opened and for a company which has never had any debt whatsoever and has an eight-figure balance sheet.

Just prior to our receiving these letters, on March 28, 2018, the Bank of America Money Services Business Control Center sent the management company a Customer Data Form for Money Services Businesses (MSBs), with numerous questions regarding what the management company does.

All of the questions were related to specific monetary transactions (transfers, exchanging currencies, issuing travelers checks), except the last one: “Does the Business engage in virtual/digital/crypto currency activity?”
To such a broad question, we answered yes – and duly completed the entire questionnaire and sent it back the same day.
When the cancellation notices arrived less than a week later, we were very impressed with the alacrity with which BoA operated.

Let me emphasize: the management company doesn’t deal in cryptocurrency. It doesn’t act as an exchange. It doesn’t act as a money handler. Its primary role is processing payroll for management company employees.
However, the word “crypto” does appear in its name. That apparently is a mortal sin in the eyes of BoA.

Two days after we received the notices of all of these closings of various accounts, I received a call from a woman who introduced herself as an employee of the Bank of America MSB Control Center.

She wanted to discuss some queries she had regarding our replies to certain questions on the Customer Data Form. I politely explained to her that her company had already told us that it was closing all of our accounts irrevocably, to which she blithely replied, “Oh, does that mean you don’t want to answer my questions?”
Somewhat nonplussed, I said, “What would be the point? Is there a chance that BoA then won’t close our accounts?”
To which she replied: “Oh, I have no idea about that. Are you sure that BoA is closing your accounts? If so, we’ll still close them, but if you answer my questions, we’ll have the information necessary to complete our records.”
I declined as politely as I could at that point and that was the end of the conversation.
Knee-jerk reaction

So, aside from the fact that the right hand of Bank of America clearly does not know what the left hand is doing, it would seem to me that BoA has gone a bit far in what is clearly a knee-jerk reaction to all things “crypto” and all things related – no matter how indirectly – to crypto.
My three-year-old daughter has a risk profile which does not align with the risk tolerance of Bank of America? In that case, I’m amazed BoA has any clients at all.

Please stop trying to swat a fly with a sledgehammer (if you must treat crypto assets like a fly). Using a firehose to put out a match (sorry to mix metaphors) is simply bad business. The crypto space is expanding faster than any other segment of the financial sector.
Beware: One day, you will need it more than it needs you and you will regret such un-nuanced behavior.

In the meantime, the management company, my wife, daughter and I have all opened two new sets of accounts – with different banks, just in case.
I have, however, realized what the motto of Bank of America should be:
“Ready, fire, aim!”


Here at Dollar Destruction, we endeavour to bring to you the latest, most important news from around the globe. We scan the web looking for the most valuable content and dish it right up for you! The content of this article was provided by the source referenced. Dollar Destruction does not endorse and is not responsible for or liable for any content, accuracy, quality, advertising, products or other materials on this page. As always, we encourage you to perform your own research!

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Author: Tim Enneking
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Bank earnings: Expect a strong first quarter, but more questions lie ahead

What should investors expect from first-quarter bank earnings?

The answer, from multiple industry veterans, is a decided “it depends.” The macro business environment should be good for banks: the economy is strong, taxes have just been cut, and regulations are likely to be rolled back.

But a peek under the hood reveals that not only is the devil in the details, but that even the broad themes may not boost market views of bank stocks, especially if management only sees more of the same on the horizon.

As Karen Petrou, managing partner for Federal Financial Analytics, put it, “This is a period of enormous policy volatility. This is a government of, by, and for tweets. It’s extremely hard to discern the direction of policy and that makes stable markets and corporate forward-looking strategic judgements based on policy very difficult.”

Normal uncertainties about policy are amplified even more now, Petrou said. It’s possible for investors to spend time analyzing the winners and losers from a trade war, for example—but even that’s not a given right now.

One positive from the uncertainty, Petrou said, is that in coming months, market choppiness will be a boon for banks: “Volatility is their lifeblood. They can’t make money when nothing changes.”

Jason Goldberg, chief bank analyst for Barclays, broke down the quarter’s specifics in a recent research note. He expects slower-than-expected growth in commercial real estate and subdued overall loan growth “but more positive outlooks.” Net interest margins—the difference between what banks make on lending versus what they pay to depositors—will expand—but banks will put aside more to cover for expected losses from loans they make. Goldberg also expects “only modest growth” in revenues from trading, and lower investment banking fees, although there’s a possibility of stronger investment banking activity in the future.

But those business conditions say little about market reactions. Petrou thinks much of the tax cut, the promise of regulatory reforms, and the possibility of steadily rising interest rates, could already be priced in to stocks. “If it’s fully priced in, the question is, for further gains what else is needed?” she said.

According to Goldberg, “Bank stocks (and the market) have been more volatile of late. On some days the market seems to want to focus on the positive data points and on others it focuses exclusively on the negative ones.”

For Chris Whalen, a long-time bank analyst, there’s a clear short-term story and a less-clear long-term outlook. “Earnings are going to be great because of the tax bill, banks have one-third more income to distribute to shareholders and so clearly the numbers are going to be higher. They’re also going to be buying back stock pretty aggressively.”

Whalen has been gloomy about the banks’ ability to make profits in the “new normal” post-crisis landscape, even without Washington uncertainty.

“Banks don’t have as many ways to make money, costs are up and the spread environment has compressed loan spreads,” he said. “Their ability to generate raw revenue, pre-tax, has diminished a lot but they’ve gotten bigger and raised more capital. They’ve been delivering earnings but mostly from a cost-cutting perspective. They are constrained in terms of future earnings because the competition for loans and other assets is intense. A big bank that’s still 8-9% equity returns, I don’t care what the earnings are, it just tells me that business is just utility and there isn’t much alpha.”

JPMorgan Chase & Co, Citigroup Inc. and Wells Fargo kick off earnings season on Friday, April 13—not that there should be anything frightful about that auspicious date, Goldberg wrote. Here’s what analysts surveyed by Factset expect for the coming quarter.

Analysts expect JPMorgan to report EPS of $2.28 in the quarter, up from $1.65 a year ago, and revenue of $27.7 billion, compared to $25.6 billion last year. Their average stock price target is $122.64 and average rating is overweight. The stock is up 30% over the past 12 months.

The Factset analyst consensus for Wells Fargo & Co. calls for per-share earnings of $1.06, compared to $1.00 a year ago. The consensus for revenue is $21.7 billion, down from $22.0 billion a year ago. The analysts have an average stock price target of $63.64 and an average hold rating. Shares of Wells, dogged by scandals, have lost more than 3% over the past 12 months; it’s the only one of the big four not to have beaten the Dow Jones Industrial Average over that period.

Factset analysts forecast per-share earnings of $1.61 for Citigroup Inc. compared to $1.35 a year ago, and revenue of $18.9 billion, versus $18.1 billion a year ago. Their average stock price target is $84.19 and average rating is overweight. Shares have risen nearly 19% over the past year.

Finally, when Bank of America Corp. reports on April 16, analysts expect earnings of 59 cents per share, up from 41 cents last year, and revenue of $23 billion, up from $22.2 billion. FactSet analysts have an average stock price target on BofA stock of $34.52 with an average overweight rating. The stock is up 31% over the past 12 months.

 


Here at Dollar Destruction, we endeavour to bring to you the latest, most important news from around the globe. We scan the web looking for the most valuable content and dish it right up for you! The content of this article was provided by the source referenced. Dollar Destruction does not endorse and is not responsible for or liable for any content, accuracy, quality, advertising, products or other materials on this page. As always, we encourage you to perform your own research!

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Author: Andrea Riquier 
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