SETL: Expect ‘Substantial’ Blockchain Use This Year
Distributed ledger technology is disrupting the legacy siloed approach to assets.
Peter Randall, chief executive of SETL, said there will be substantial take up of the firm’s blockchain technology by the end of this year and there could be more than $500bn of assets recorded on IZNES, the pan-European record-keeping platform for funds.
SETL was launched in July 2015 to develop a multi-asset, multi-currency institutional payment and settlements infrastructure using blockchain technology. The SETL platform uses permissioned distributed ledger technology to record ownership and transactions, simplifying the process of matching, settlement, custody, registration and transaction reporting.
Randall told Markets Media: “At the end of this year we expect a very substantial take up of our products. For example, IZNES could have more assets on a single chain than the total $500bn market cap of all crypto currencies.”
SETL and four asset management firms – OFI AM, Groupama AM, La Financière de l’Échiquier and Arkéa Investment Services – announced the launch of IZNES in September last year.
Jean-Pierre Grimaud, chief executive of OFI AM, said in a statement: “OFI Asset Management wanted to be actively involved in this market project, which offers asset management firms new distribution solutions in the interest of investors thanks to blockchain technology.”
IZNES started processing live transactions last month when OFI Asset Management used the system in a series of trials with selected clients. More than 20 large European fund managers have now joined IZNES.
SETL said in a statement: “This production phase demonstrates IZNES’ interoperability with the existing fund distribution ecosystem; the units currently used for the transactions already existed, and have not been created specifically for blockchain.”
Randall added this was an important step in bringing 21st century technology to asset management so it can benefit from reduced costs, increased transparency and a more efficient workflow.
He said: “Asset owners use fund managers as their agents. Citi has one of the biggest businesses servicing asset managers and Credit Agricole owns Amundi, the largest fund manager in Europe.”
Citi and Crédit Agricole are among the new shareholders in SETL’s latest fundraising. “These are business sponsored investments rather than just financial investments and we are working on a variety of projects with them,” added Randall.
Crédit Agricole CIB participated in the private fundraising of SETL and French bank made its first equity investment in a fintech.
François Marion, deputy chief executive of Crédit Agricole CIB, said in a statement : “SETL has developed a private blockchain that already integrates the specific matters of the banking industry. It paves the way for an industrial partnership that will contribute to the work already undertaken by Crédit Agricole CIB on the blockchain technology over the last two years and will enable Crédit Agricole CIB to speed up the digitalization of its processes and exchanges with its customers.”
In 2016 SETL launched its blockchain-powered OpenCSD platform allowing any market participant to commission and run a permissioned registry service for payments, settlement and clearing of cash and other financial instruments.
The platform includes a permissioned membership structure; a range of control functions including clearing, settlement and corporate actions; liquidity functionality including collateral and repo facilities; and a secure messaging system. Customers can access SETL’s API to build apps around their own needs to extend and complement the SETL built-in control functions. The platform is asset neutral and works across securities, private equity or as a platform for foreign exchange or e-money.
“The old siloed approach to assets is now being fully disrupted by cheaper, faster and smarter blockchain technology,” added Randall. “This just how Chi-X competed against exchanges although the opportunity set is now much larger.”
Randall is the former chief executive and founder of Chi-X, the pan- European equities trading venue, which was acquired by Bats Global Markets in 2011.
The global share registrar Computershare increased its investment in SETL’s latest fundraising and group chief executive Stuart Irving joined the fintech’s board. Irving said in a statement that record ownership depends on having provability at its core and that this feature provide by SETL is a competitive differentiator.
“SETL has moved up the scale in increasing capacity, speed and volume in its technology,” added Randall. “In a couple of years our blockchain will be used across the piste for end-to-end post-trade processes.”
SETL is capable of processing more than 80,000 transactions per second across over 100 million accounts concurrently in a globally distributed configuration.
Randall added: “We have two or three more significant announcements coming down the pipe.”
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