By Jemima Kelly and Gertrude Chavez-Dreyfuss
NEW YORK (Reuters) - Thomson Reuters (TO:TRI) has joined a consortium of the world's biggest financial institutions that is working on how to use blockchain technology in global financial markets, the company said on Tuesday.
Blockchain technology powers the digital currency bitcoin, enabling data sharing across a network of individual computers. It has gained worldwide popularity due to its perceived usefulness in recording and keeping track of assets across practically all industries.
Thomson Reuters will be the first major data and technology provider to join R3, the consortium of more than 55 banks and other financial institutions. New York-based fintech firm R3 formed the consortium last year.
Thomson Reuters is the parent company of Reuters News.
"There are 50 financial institutions that are already members of R3 and they are all clients of ours," said Mark Rodrigues, managing director, strategic customers & solutions, at Thomson Reuters in New York.
"We believe strongly in collaboration with clients, specifically client-led innovation," Rodrigues told Reuters News.
He noted that Thomson Reuters is particularly interested in exploring blockchain in its trade finance business, which lacks data standards, as well as in foreign exchange clearing and settlement.
Thomson Reuters runs currency trading platforms FXall and Thomson Reuters Matching. The total average daily volume of foreign exchange trading across Thomson Reuters platforms totaled $394 billion in June.
"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."
He added that Thomson Reuters blockchain work is not confined to the financial sector. The company is looking at blockchain applications for its legal and tax business.
Thomson Reuters has been working on blockchain initiatives for more than a year. It has blockhain labs in both London and New York.