11 big banks test blockchain-based trading system

Eleven major banks, including Barclays, UBS and HSBC, said they had tested a system that could make trading much faster and cheaper, using the technology that underpins crypto-currency bitcoin. The banks are part of a consortium of 42 major lenders, brought together last year by New Yorkbased software company R3 to work on ways blockchain technology could be used in financial markets - the first time so many have collaborated on using such systems.

A blockchain is a huge, decentralised ledger of every bitcoin transaction, verified and shared by a global computer network, that can also be used to secure and validate any exchange of data, including real assets, such as commodities or currencies. Banks reckon the technology could save them money by cutting out middlemen and making their operations more transparent. But analysts caution it is early days - bitcoin was invented just six years ago and blockchain experiments are still under way.

For this test, R3 used a Microsoft platform, which runs on a blockchain built by Ethereum, a non-profit organisation. The 11 banks in the simulation, operating across four continents, each used their own computer, or "node", and transferred "Ether" to each other - Ethereum's equivalent of bitcoin, R3 said.