The new project will initially focus on the Australian market, using SETL's blockchain to record asset ownership and to automate the transfer of title
London: Stock transfer and registrar company Computershare and British financial technology start-up firm SETL have teamed up on a project to create the first immutable record of securities ownership using blockchain technology, the companies said on Thursday.
Blockchain, or distributed ledger technology, keeps track of and authenticates a continuously growing list of transaction data which is secured by a global network of computers and cannot be tampered with or revised.
Though still in its infancy, having first been used to underpin the web-based currency bitcoin that started seven years ago, the technology has attracted increasing interest from banks and other financial institutions, who reckon it could cut their transactional costs, speeding up clearing and settlement processes, and increase market transparency.
The new project will initially focus on the Australian market, using SETL’s blockchain to record asset ownership and to automate the transfer of title from one owner to another.
“It’s going to make (Computershare’s) life easier, it’s going to make their clients’ lives easier, and it’s potentially going to reduce the cost of the whole administration of securities ownership registers," said Anthony Culligan, SETL’s founder and chief executive.
Culligan said the new technology would make central securities depositories (CSDs), often run using old computer systems, more lightweight and efficient. But though they might in the future be smaller, he said CSDs would still need to exist for regulatory reasons.
The project must still get regulatory approval, and Culligan estimates it will take 12 to 18 months for it to be operational.
Computershare, one of the world’s biggest securities registrars whose clients include the UK Debt Management Office, said it had chosen to work with SETL because “they have demonstrable working technology, coupled with a deep bench of financial services expertise and experience".
Culligan was previously a hedge fund investor and JP Morgan director, while SETL’s chairman is former Barclays chairman Sir David Walker and its joint chief executive officer is Peter Randall, the former head of electronic stock exchange Chi-X Europe.
Australia is emerging as a leader in blockchain investment. This year the Australian Securities Exchange bought a $10 million stake in Digital Asset Holdings, a start-up headed by former JP Morgan luminary Blythe Masters, who has been leading the charge into blockchain technology for financiers.
Masters said last month that Australian markets’ lack of fragmentation made the country an ideal location to test the nascent technology. Reuters