A seven-strong consortium has joined forces to explore how blockchain technology could help lower the cost of providing post-trade settlement services to small- to medium-sized enterprises (SMEs).
BNP Paribas Securities Services, Caisse des Dépôts, Euroclear, Euronext, S2iEM, Société Générale and Paris EUROPLACE revealed that they have signed a memorandum of understanding to create the initiative. By combining their money and expertise, the group hope that they can harness the blockchain technology reducing financial costs and improving SME’s access to capital markets.
The group will also consider developing an independent company to design, develop, and deploy blockchain technology to other international post-trade partners. This new development is part of an innovative regulatory environment in France that permits the issue and circulation of securities utilizing blockchain technology.
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Over the past months, financial institutions from across the world have been joining forces to create blockchain infrastructure for different areas of the financial system. It has been particularly strong in France, with 11 financial service firms making an announcement in December of a similar partnership that would explore the ethical and regulatory implications of blockchain technology.
This latest move, however, highlights the fact that if permissioned blockchains are to succeed, financial institutions that have been competitors in the past, will now need to work together.
A joint statement by the group reads:
By pooling our strengths in this ground-breaking area, we are focusing on new solutions that will give small and mid-sized companies – key actors for growth in Europe – easier access to the financing they need.
Blockchain technology has the potential to enhance and update post-trade operations by helping securities registration for the European market and permitting fast execution of trades with clearing and settlement in real time at T+0.
The joint statement further added:
“With this project, we are securing the means to seize opportunities that blockchain distribution can offer: speed of execution, low cost, and security.”
Image from Flickr. Image courtesy of Giorgio Brida.