SETL Aims For Profitability

Shanny Basar

Peter Randall, president of SETL, said the institutional payment and settlement infrastructure provider using blockchain technology is looking forward to being profitable this year after coming out of administration.

Peter Randall, SETL

Randall told Markets Media that when SETL was set up, the London-based firm intended to build technology that connected issuers with investors.

Last year SETL developed and established ID2S, a regulated central securities depository, and IZNES, a record-keeping platform for mutual funds, which both use blockchain.

“The success in achieving this gave rise to the need for regulatory capital and the support of a bigger balance sheet than SETL could provide on its own,” he added.

In March SETL appointed Quantuma as an independent administrator to separate the software development business from the investments portfolio and said it was seeking to place its holding in ID2S with a larger financial services firm.

Randall said: “IZNES and ID2S are being spun out as separate and independent entities.”

He added that SETL will continue to be the the supplier of core technology for both platforms. This month SETL announced that it had completed its corporate restructuring programme.

“We have right-sized the business for our new strategy so we are looking forward to being profitable this year,” added Randall. “In 12 months time SETL should consolidate its reputation as the place to go for industrial blockchain for post-trade infrastructure.”

The firm said that under the direction of chief executive Philippe Morel, who joined last year, SETL has restructured its cost-base, refocused its operations in London and the Ipswich development centre, and expects to deliver robust financial performance for its shareholders.

“SETL is good at specifying and designing systems that meet the needs of regulated markets,” added Randall. “The administrator was able to restructure SETL to separate out the infrastructure elements of the business. We kept in close contact with clients during the process and remained engaged on all projects.”

Randall continued that SETL has a number of large initiatives which include a project to refine relationships between a group of large money centre banks who want to lower the cost of trade processing; working with an incumbent exchange to settlement costs for their clients and working with a national payment processor.

Some market participants are still unconvinced of the benefits of blockchain.

“Financial market participants are sceptical of the Ethereum blockchain as it does not scale or provide the necessary speed or capacity for financial markets,” said Randall. “Using Ethereum is like trying to erect a building using plastic bricks whereas using  SETL means building with concrete blocks.”

In addition, the firm faces competition from other fintechs who are developing blockchain applications for post-trade operations.

“SETL is the only fully functioning regulated blockchain which is connected to a central bank,” added Randall. “ID2S is connected to the ECB via T2S and so has settlement finality which is powerful and unique.”

The European Central Bank launched TARGET2-Securities in 2008 to end fragmentation and lower the cost of cross-border settlements in the European Union. T2S began operating in 2015 and more than 20 central securities depositories in 20 markets have migrated to T2S in five waves.

Related articles

  1. This will enable smart contract developers to build advanced blockchain applications.

  2. Crypto assets have not been protected in some bankruptcies.

  3. R3's Mike Wilkins outlines three practical, tangible ways digital assets and blockchain are driving change.

  4. Mike Wilkins of R3 discusses blockchain and the importance of interoperability for digital assets.

  5. This is a major step toward making private market strategies accessible to individual investors.