Credit Suisse & Instinet Use Blockchain for T+0 Settlement

In other news, FNZ & State Street collaborate, NICE Actimize unveils a new surveillance service, and Horizon Software expands efforts in Vietnam.

Instinet & Credit Suisse Use Paxos Settlement Service

Instinet and Credit Suisse used blockchain technology from Paxos Trust Company to settle U.S. listed equities trades on a same-day, T+0 settlement, cycle via the Paxos Settlement Service, the market infrastructure provider confirms.

“The trades occurred [March 4, 2021] at 11 AM ET and 3 PM ET and were settled at 4:30 PM ET, demonstrating the platform’s ability to enable same-day settlement for trades conducted throughout the day,” according to the Paxos announcement. “In the legacy system, settlement can only occur the same day if trades are completed before 11 AM ET, and therefore is rarely utilized.”

The Paxos Settlement Service is described as “a private, permissioned blockchain solution designed to allow two parties to bilaterally settle securities trades directly with each other. The platform is interoperable with the legacy clearing system and can facilitate settlement on any time cycle,” Paxos officials say.

“It is also the first live application of blockchain technology for the U.S. equities market and enables the simultaneous exchange of cash and securities to settle trades. Paxos Settlement Service has been settling trades daily for more than a year and is operating on the standard T+2 settlement timeframe. The same-day settlement was conducted with live trades to demonstrate the future capability of the platform,” officials add.

Paxos operates the platform under the aegis of the SEC’s No-Action Relief protocol. Paxos officials say they will apply for full clearing agency registration with the SEC, and they hope to be registered this year.

If the SEC grants a clearing agency registration for the Paxos Settlement Service, the vendor says it will provide the industry with “greater flexibility around their settlement cycles, ranging from T+2 to T+0, optimized according to their trading and asset management strategies. Additionally, Paxos will run multilateral netting processes in real-time to ensure efficient, fast, and transparent net settlement of transactions,” officials say.

“Settlement in U.S. equities is opaque and laden with unnecessary delays, capital costs and expenses. We are working hard to improve settlement for the benefit of all market participants,” says Charles Cascarilla, CEO and co-founder of Paxos, in a prepared statement.

“We’re pleased to work with Paxos and Instinet to advance this technology, which will help unlock capital, increase liquidity and reduce risk over time,” says Emmanuel Aidoo, head of Digital Assets Markets for Credit Suisse, in a statement. “These advancements will ultimately benefit the broader market as more firms join the platform.”

Paxos officials say they offer technology to tokenize and provide custody, trading, and settlement services for assets. The vendor also offers crypto solutions for enterprises, crypto trading and settlement solutions for securities and commodities. Paxos customers include PayPal, Credit Suisse, Société Générale, StoneX and Revolut.

FNZ & State Street Form ‘FNZ Trust Company’    

Wealth management platform vendor FNZ and custodian bank State Street are pooling their resources for FNZ Trust Company.

The new firm is described as “a new wealth manager servicing venture” that will involve the custody expertise of State Street, and FNZ’s global wealth management platform, officials say.

FNZ last year acquired a majority stake in State Street’s Wealth Manager Services (WMS) business in the U.S. The acquisition closed on April 1, 2021 and FNZ Trust Company is now operating the WMS business, officials say. State Street retains a minority interest in the newly formulated business.

FNZ’s global wealth management platform services “approximately 8,000 wealth management and financial advice firms across Europe, U.K., and Asia-Pacific. State Street will serve as sub-custodian in respect of all custody assets of the clients that have transitioned to the new firm,” officials say.

Lee Jones, who was responsible for WMS as a senior vice president within State Street, will serve as Chief Executive for FNZ Trust Company. Approximately 100 staff members have moved with him from State Street to the new venture, officials say.

NICE Actimize Launches A.I.-Based Surveillance   

NICE Actimize has launched a surveillance and suitability solution the uses artificial intelligence (A.I.) and is offered as a single, integrated cloud-native platform.

The new SURVEIL-X Suitability for Wealth and Insurance builds upon the capabilities of NICE Actimize’s SURVEIL-X Holistic Conduct Surveillance platform. SURVEIL-X Suitability was created with wealth management, mutual fund, pension, and insurance firms in mind.

The new system “combines communications surveillance, sales practices and suitability, and Regulation Best Interest (Reg BI) surveillance,” officials say.

The new offering is in response to more regulatory pressure upon financial services organizations “to monitor regulated employees; review their investment recommendations, transactions and accounts for suitability and undue risks; and ensure that mandated disclosures are being properly communicated,’ according to NICE Actimize officials.

As evidence, the vendor cites: FINRA Rules 2111 and 3110; the Investment Industry Regulatory Organization of Canada (IIROC) Rule 1300; the Ontario Securities Commission’s (OSC) Client Focused Reforms; the Monetary Authority of Singapore’s Private Banking Sales and Advisory Practices guidance; and the Securities and Futures Commission’s and Hong Kong Monetary Authority’s suitability obligations.

Horizon Software Focuses on Vietnam’s Capital Markets

Horizon Software, an electronic trading technology vendor, is making its solutions available to securities firms participating in the capital markets of Vietnam, officials say.

“This decision feeds into the wider electronification of the Vietnamese markets, off the back of capital surging here throughout the pandemic. This is one of the many examples of the way in which Horizon is extending their foothold in Asia,” vendor officials say.

“Throughout the pandemic, capital has poured into the Vietnamese stock market – surging 20 percent to US$16.64 billion last year. With average transaction value estimated at US$304.8 million per session, up 51.5 percent year-on-year, the market is set for greater electronification,” Horizon officials say.

Since 2017, Horizon Software has been partnering with Ho Chi Minh Stock Exchanges (HOSE) and “has supported the stimulation of the Vietnamese markets through market-making and the issuing of covered warrants,” officials say. “Horizon currently has five leading security houses in Vietnam currently using Horizon software.”

The vendor is “also aiming to expand its OMS [order management system] across the region,” officials say. The OMS offers a cross-asset platform for cash and derivatives, algorithms for trading strategies, and “automated and low latency technology inherited from principal trading.”

A securities trading firm in Vietnam, BSC, report that for two years, it has been using Horizon trading technology to help “augment efficiencies in our trading workflows,” according to Horizon.

“Localized solutions have always been the primary driver, enabling us to maintain our position as the leading provider in the Vietnamese market,” says Emmanuel Faure, head of APAC sales at Horizon, in a prepared statement.