Euroclear has taken a small stake in Finality, the international consortium of global financial institutions, to help build a blockchain-based payment system to support the adoption of tokenised assets and marketplaces.
Euroclear says the investment aims to increase speed and efficiency for a range of post-trade operations from primary market issuance to secondary market and collateral trades, and servicing interest payments.
This investment follows the recent Euroclear-led Central Bank Digital Currency (CBDC) experiment to settle French government bonds on distributed kedger technoigy (DLT), commissioned by the Banque de France.
“As an open financial market infrastructure our approach to innovation has always been to develop services in close co-operation with clients and pioneering networks and infrastructures,” said Lieve Mostrey, CEO Euroclear Group.
The three year old Fnality, whose owned by financial institutions such as Nasdaq, BNY Mellon, State Street, and UBS, said Euroclear’s involvement would expand the consortium’s footprint in market infrastructure, the financial system’s basic plumbing, as it moves from testing to implementing its plan this year.
Fnality last month moved one step closer to launch after two major European banks successfully conducted a proof of concept showcasing the benefits of distributed ledger technology (DLT) in offering near-instant settlement in capital markets and payments.
Rhomaios Ram, CEO Fnality International says, “As we progress from testing to real-world implementation, welcoming Euroclear Group as an investor into the Fnality International consortium will significantly enhance the diversification of Fnality’s network and expand our industry footprint, especially around Financial Market Infrastructure. This has obvious positive implications for the execution of our business and use case strategy.”
In recent years, market participants have demonstrated a wider acceptance of DLT and its potential for significantly transforming global capital markets.
Regulators are starting to create the conditions to allow for its use in securities markets, such as the EU DLT pilot regime which is a sandbox for tokenised securities and settlement focuses on the tokenisation of conventional financial instruments such as stocks, bonds and UCITS, the European version of mutual funds.
©Markets Media Europe 2022
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