Fintech startup Paxos is set to launch a blockchain-based settlement platform for US-listed securities amid obtaining a “no-action” permit from the Securities and Exchange Commission (SEC).
Announced on Monday, the New York-based startup has on-boarded Credit Suisse and Société Générale to utilize the new settlement services as its first two clients.
Based on a private and permissioned network, the platform will settle for a limited number of US-listed securities initially. It is the result of 18 months of the development process, while the go-ahead from the regulator was received after efforts of six months.
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Making the system efficient with blockchain
Per Paxos, the platform will reduce fees and help clients gain access to capital otherwise trapped in the legacy settlement system. It will also allow the simultaneous exchange of cash and securities to settle trades and is compatible with current systems, simplifying integration.
Commenting on the development, Charles Cascarilla, co-founder and executive officer at Paxos, said: “The U.S. equities business continues to face unprecedented consolidation and economic pressures, requiring a comprehensive transformation of market structure. This is an important first step on our journey to reimagine the entire post-trade infrastructure, and one that creates immediate benefits for market participants.”
Meanwhile, the two partners also need to take permission from the financial market regulator to allow them to participate in the settlement process. Paxos is assuming that both its companies will receive SEC’s green light in the next 30 days.
“We believe the process of securities settlement can be greatly optimized using blockchain, and with Paxos Settlement Service we will benefit from these efficiencies first hand. We see this as a significant and important milestone in our Digital Asset Markets strategy and foresee opportunities to leverage this product across numerous asset classes in the future,” Emmanuel Aidoo, head of digital asset markets at Credit Suisse, said.