Why it matters
Settlement is where a trade stops being a promise and becomes property. The gap between agreeing a trade and completing it is where principal risk lives: the risk that one side hands over cash or securities and the other side fails before reciprocating. Conventional markets manage that gap with central counterparties, margin, netting and settlement windows. Atomic settlement proposes to close the gap instead of insuring it, by making the transfer of both legs a single indivisible ledger operation.
The economic claim is narrow and worth stating precisely. Atomicity removes principal risk between the two parties to a transaction. It does not remove credit risk before the transaction, market risk on the position, or the operational risk of the ledger itself. Institutions that describe atomic settlement as removing counterparty risk are overstating it.
How it works
Atomicity requires that the assets on both legs be represented on ledgers that can be committed together. The simplest case is a single ledger holding both a security token and a cash token; a smart contract debits and credits all four balances in one state transition, which either succeeds entirely or reverts. The BIS Quarterly Review of March 2020 set out this mechanism, noting that when cash and security tokens sit on the same ledger they can be "instantly and simultaneously delivered".
Most institutional deployments are not single-ledger. Cash sits in a regulated payment system and the asset on a separate platform, so atomicity has to be constructed across systems using hash-locks, conditional payment triggers or a coordinating ledger. In June 2024 Fnality and HQLAᵡ demonstrated a cross-chain atomic exchange for intraday repo, with the trade captured through Eurex's F7 system, collateral recorded on HQLAᵡ's Corda-based platform and cash on the sterling Fnality Payment System test environment.
The Eurosystem is building the same capability as public infrastructure. Its dual-track plan of 1 July 2025 defines Pontes, a bridge linking DLT platforms to TARGET Services so that settlement occurs in central bank money, with a pilot targeted for end-Q3 2026, and Appia as the longer-term integrated ecosystem.
Economic mechanism
Atomic settlement changes the cost structure of settlement rather than eliminating cost. It substitutes liquidity for credit. Under netting, a participant funds only its net obligation at the end of a cycle; under gross atomic settlement it must hold the full asset and the full cash at the moment of the trade. The BIS authors made this trade-off explicit: tokenized systems tend toward the gross, transaction-by-transaction form of delivery-versus-payment, which "generally requires more liquidity", and market participants may resist shorter cycles for exactly that reason.
That is why the interesting institutional cases are ones where intraday liquidity is scarce and expensive. Intraday repo is the clearest: the J.P. Morgan, HQLAᵡ and Ownera service reported $5bn traded in its first month following its August 2025 launch, because the product sells precise control over when cash and collateral move, not merely speed.
Atomicity also creates option value through composability. BIS Bulletin No 72 of 11 April 2023 argued that bundling conditional actions into one settlement event makes feasible transactions that incentive and information problems currently block.
Participants
Central banks supply the settlement asset and the legal finality that makes atomicity meaningful; the Bank of England, the Federal Reserve Bank of New York, the Banque de France, the Bank of Japan, the Bank of Korea, the Bank of Mexico, the Swiss National Bank and the Bank of Canada all took part in Project Agorá. Commercial banks provide tokenized deposits. Market infrastructures and platform operators (Fnality, HQLAᵡ, Eurex, Clearstream, Kinexys) supply the coordinating ledgers. Legal designation matters as much as technology: HM Treasury designated the Sterling Fnality Payment System in August 2022.
Examples
Fnality began live sterling payment operations on 14 December 2023 with Lloyds Banking Group, Banco Santander and UBS, using a digital representation of funds held in an omnibus account at the Bank of England's RTGS service, subject to limits set by the Bank.
Project Agorá, coordinated by the BIS with the Institute of International Finance, involved eight central banks and more than 40 private financial institutions. Its findings, published on 27 May 2026, were that atomic settlement of cross-border wholesale transaction chains "is achievable securely across currencies and jurisdictions", that privacy could be preserved at balance and transaction level, and that legal analysis supported settlement finality in all seven jurisdictions examined.
Risks and limitations
Liquidity displacement is the first-order risk. Replacing netting with gross settlement raises intraday funding needs, and if central bank liquidity is not elastically available at the moment of settlement, gridlock replaces credit risk.
Cross-ledger atomicity reintroduces the problem it claims to solve. Bridges, hash-locks and coordinating contracts are themselves failure points, and a reverted leg leaves a participant with an unhedged exposure and no finality to fall back on. Project Agorá's own conclusion was that technical and operational alignment work remains.
Legal finality is jurisdictional. A ledger state transition is not automatically final under insolvency law; finality depends on statutory designation, which exists for some systems and not others. Atomicity also narrows the window for error correction: reconciliation breaks once fixable within a settlement cycle become disputes over a completed transfer.
Key metrics
Useful measures are intraday settlement values on live platforms rather than headline notional: the $5bn traded in the first month of the J.P. Morgan and HQLAᵡ intraday repo service (from August 2025), and the number of designated payment systems capable of settling tokenized legs in central bank money. Peak intraday liquidity demand, not average, is the constraint to watch.
Related research
The BIS Quarterly Review article of March 2020 remains the clearest statement of the speed-versus-liquidity trade-off. BIS Bulletin No 72 covers composability. The Project Agorá release of 27 May 2026 is the most substantial multi-jurisdiction test to date, and the ECB's Pontes and Appia plan sets out how a central bank intends to supply the cash leg.