PRESS RELEASE, Paris, London, 15 September 2017

SETL and four asset management firms are launching IZNES, the pan-European fund record-keeping platform based on blockchain technology

Paris, London 15 September 2017: SETL and four asset management firms announced today the launch of IZNES, the pan-European fund record-keeping platform based on blockchain technology

The platform provides investors, asset management firms, distributors and wealth management advisers with easy and rapid access to fund units. The platform enables firms to enter into new relationships with investors, manage KYC processes, handle subscription / redemption instructions, and settle transactions and record positions.

Compatible with all distribution channels, IZNES reduces transaction costs, increases transparency, and optimises operational workflow. It will also enable new value-added services to be developed. IZNES relies on proprietary technology developed by SETL. To ensure the best possible service, the functional specifications were defined in line with user input and contributions. The initial version was delivered by SETL in July 2017 and validated by OFI AM, Groupama AM, La Financière de l’Échiquier, and Arkéa Investment Services.

Together, SETL and its partners are now working with other interested parties to develop an enriched version of the platform, with the intention of going into production in early 2018.

According to Jean-Pierre Grimaud, CEO of OFI AM: “OFI Asset Management wanted to be actively involved in this market project, which offers asset management firms new distribution solutions in the interest of investors thanks to blockchain technology."

Pierre Davoust, CEO of SETL France, added: “IZNES is the result of the alignment between the strong demand from asset management firms to establish a simple, effective relationship with their investors and the cutting-edge technology developed by SETL.”

“IZNES is a project that will revolutionise the fund industry in Europe and bring substantial benefits to asset management firms as well as investors and their intermediaries. I look forward to working with our partners to build this next-generation platform and invite all interested parties to join us at www.iznes.io".

PRESS RELEASE, London, 14 June 2017

SETL is leading Blockchain at the TechCrunch Europas Award

London, 14 June 2017: SETL, the financial blockchain specialist, won the award for ‘Hottest Blockchain Startup’ at the Awards held in London on 13 June 2017.

Founded in 2009, The Europas are the premier awards for Europe’s hottest tech startups. The Awards celebrate the most forward thinking, progressive and innovative tech companies across over 20 categories. While the awards concentrate on the newest companies on the scene, they also bring together the mid and late stage technology startups, as well as leading investors in the EMEA region. The Europas are editorially driven, independent awards, judged by the community itself.

SETL was launched in July 2015 to deploy a multi-asset, multi-currency institutional payment and settlements infrastructure based on blockchain technology. The SETL system will enable market participants to move cash and assets directly between each other, facilitating the immediate and final settlement of market transactions. The SETL system maintains a permissioned, distributed ledger of ownership and transaction records, simplifying the process of matching, settlement, custody, registration and transaction reporting.

Peter Randall, SETL CEO said: “We are thrilled to win the award for Hottest Blockchain Startup. We set out to tackle the procedural inefficiencies in financial services, taking payment and settlement as our starting point. Along the way we have discovered multiple use cases for our market leading blockchain technology, from a consumer payment card to securities registration and foreign exchange. We welcome the recognition from the wider technology industry as SETL’s technology has a wealth of applications in financial services and beyond.”

PRESS RELEASE, London, 15 February 2017

SETL announces the launch of its Global Engineering Centre and expansion of its technology team

London 15 February 2017: SETL, the financial blockchain specialist, today announced the opening of its Global Engineering Centre in Ipswich, UK. Ten new staff have been recruited to work in the new office and to support SETL’s international expansion, bringing SETL’s total worldwide workforce to 24. The centre was officially opened by Ben Gummer, Member of Parliament for Ipswich and Minister for the Cabinet Office and Paymaster General and by Chairman of the SETL board Sir David Walker.

The new team includes blockchain technology architects and specialists for server systems analysis, enterprise storage, web development, integration and project management. SETL operations in Ipswich will be overseen by CTO Nicholas Pennington. SETL joins more than 70 growing technology businesses specialising in areas from financial technology to telecommunications and big data that are based in the Ipswich area and form part of the New Anglia Local Enterprise Partnership for Norfolk and Suffolk.

SETL was launched in July 2015 to deploy a multi-asset, multi-currency institutional payment and settlements infrastructure based on blockchain technology. The SETL system will enable market participants to move cash and assets directly between each other, facilitating the immediate and final settlement of market transactions. The SETL system maintains a permissioned, distributed ledger of ownership and transaction records, simplifying the process of matching, settlement, custody, registration and transaction reporting.

Ben Gummer MP commented: “I am delighted to have been invited to open SETL’s new office here in Ipswich. They are the latest of a number of businesses choosing to locate in our tech hub. Suffolk has a thriving ICT sector, with the University of Suffolk ensuring that there is a pipeline of new local talent. Taken together with Norfolk, we have the third highest concentration of science and research parks in the country.”

Peter Randall, CEO of SETL, noted: “Since we launched in 2015, SETL has continued to expand rapidly, with new blockchain products and initiatives. Our new engineering centre will be the powerhouse that supports our growth ambitions as we deploy blockchain projects globally.”

PRESS RELEASE, London, 15 November 2016

SETL, Deloitte and Metro Bank put Sterling onto the Blockchain for Consumer Payments.

London 15 November 2016: SETL, Deloitte and Metro Bank completed a series of firsts this week in London. SETL provided a contactless smartcard enabled blockchain allowing digitised payments, Deloitte exercised its blockchain ID system known as Smart Identity and Metro Bank hosted a connected client account. In an initial test, over 100 users were issued with contactless smartcards and used them to make purchases from merchants equipped with contactless terminals. Consumers and merchant balances were updated live-time with all balances held at Metro Bank.

The successful implementation of a blockchain smartcard retail payment system offers the possibility of significantly reducing current high costs for processing retail transactions. In addition it opens the door to competition in merchant servicing to challenger banks, which are all but excluded from this activity by the incumbent clearing banks. The service which is provided by SETL Payments Ltd, subject to appropriate regulatory approval, could launch as early as 2017.

In on-boarding participants, Deloitte demonstrated its Smart Identity blockchain solution communicating with SETL’s payment blockchain. Customers taking part created their identity records on the Deloitte blockchain and had their key details certified by Deloitte. These certified details were then asserted to the SETL Blockchain to set up user credentials. This is believed to be the first commercial inter-blockchain application demonstrating how portable, cryptographically secured identity might be applied in a real-world consumer environment.

SETL’s capacity to process billions of transactions a day with burst speeds in the tens of thousands per second means that it could easily keep up with the volumes processed by the large card networks who process around 2000 to 3000 transactions per second on average with burst rates of around 14,000 transactions per second. Instant settlement for the retailer and the possibility of charges being only a fraction of the credit and debit card schemes could prove to be powerful incentives for its adoption.

Furthermore, the use of point to point encryption significantly reduces the possibility of the kind of wholesale data leakage that has impacted the legacy consumer payment infrastructure over the last decades.

David Myers, Partner at Deloitte added: “To use the Deloitte Identity solution in this way is particularly relevant as it underlines the importance, in the new distributed ledger world of identity management. We are pleased that SETL together with Metro Bank have been able to demonstrate both speed, capacity and identity in the challenging retail payments arena.”

Craig Donaldson, CEO at Metro Bank commented: “We’re always looking for new ways to improve our customers’ banking experience, and payments is an often overlooked but critical part of a customer’s journey. Retail payments have for too long been dominated by a few players to the detriment of customers. Given all the potential that blockchain has to offer, we hope that the success of today’s test will play a key role in moving us a step closer to providing a more efficient and flexible service for customers.”

Peter Randall, CEO of SETL noted: “We are extremely pleased to be working with Deloitte and Metro Bank on this ground-breaking project. The team are leaders in the field of transaction implementation and retail banking service and our common focus on high speed, capacity and resiliency makes us natural partners. This is not a proof-of-concept or a prototype; it will be a revenue generating implementation of distributed ledger technology.”

PRESS RELEASE, London, 10 November 2016

SETL appoints Martin Clements, cyber security expert, to its board

London 10 November 2016: SETL, the London based financial blockchain specialist, has appointed national security expert Martin Clements CMG OBE to its board.

SETL was launched in July 2015 to deploy a multi-asset, multi-currency institutional payment and settlements infrastructure based on blockchain technology. The SETL system will enable market participants to move cash and assets directly between each other, facilitating the immediate and final settlement of market transactions.

Martin Clements joins the SETL board having recently retired from his role as Director General responsible for Technology and Transformation at the UK Foreign and Commonwealth Office. This followed a career focused on national security issues and capabilities, serving in the Middle East, South Asia and Europe. For the last decade, Martin was Senior Information Risk Owner, in charge of managing technical risk and other vulnerabilities to strategic information systems in the most testing of circumstances. He has extensive experience in transforming of some of the UK's most sensitive technical systems and securing them against cyber and insider threats.

Peter Randall, SETL’s CEO, said: “We are in no doubt as to the importance of system resilience and cyber security in the payments and settlements world and the appointment of Martin is an indication that SETL will deal with these matters at board level. We are extremely pleased to welcome Martin to our board and expect to benefit from his very long and deep experience in security and the management of strategic information systems.”

Sir David Walker, Chairman of SETL and former Chairman of Barclays Bank, commented: “In building a team which can credibly offer innovation in payments and settlements, it is important to establish a culture of diligence and awareness of cyber security from the start. Martin’s career in government has been about implementing that at the highest level. We are thrilled to have him on our board and believe that it further strengthens our ability to deliver innovative and robust blockchain solutions to the market.”

PRESS RELEASE, London, 26 October 2016

SETL partners with Cobalt DL for FX Post Trade Solution

London, 26 October 2016: SETL, the London based financial blockchain specialist, and Cobalt DL, a private peer-to-peer network that reduces post-trade cost and risk for financial market participants through distributed ledger technology, today announced a partnership to deploy the SETL OpenCSD within the Cobalt FX post trade platform. The service is set to launch in 2017, with 15 leading institutional FX participants already committed to the service.

In today’s FX market, legacy infrastructure is duplicative and inefficient as, a single trade creates multiple records for all parties, including buyers, sellers, brokers and clearers. FX market participants incur multiple unnecessary license fees, ticketing charges, IT overheads and staff costs as a result of the complexity of existing structures. By creating a shared view of trade data, Cobalt DL frees up back and middle office resources from multiple layers of reconciliation. The Cobalt FX platform is designed to integrate seamlessly with all trading sources and venues, providing immediate efficiency benefits which analysis has shown to deliver a significant cost reduction when compared with existing infrastructure.

Cobalt DL will create a single, shared view of each FX transaction using SETL’s OpenCSD platform. The immutable record will obviate disagreements and reconciliation problems between participants and is expected to result in significantly reduced costs. Cobalt DL’s combination of market expertise and forward-thinking technology will dramatically shake up the post-trade space

The SETL OpenCSD distributed ledger to be deployed by Cobalt DL will be a depository of trade information, captured in the Cobalt post trade reconciliation system. SETL OpenCSD is able to process burst speeds of over 20k transactions per second., and has capacity to process many millions of bargains per day. The record will provide cryptographic proof of a trade and of the parties’ agreement to the terms of the trade. Participants will be able to retrieve details of their own trading activity from the ledger in a manner which absolutely verifies their inclusion in the shared record, but does not allow them to examine other participants’ activities.

Andy Coyne, co-founder of Cobalt DL added: “We have undertaken an exhaustive review of the technology in the DL space and have chosen to partner with SETL due to their demonstrated technical leadership in the field, their ability to process trades at scale and their team’s deep understanding of financial services. The FX market requires systems to be able to achieve burst throughputs of over 20K transactions per second with daily capacity in the millions SETL were able to demonstrate working technology processing at these speeds and in excess of 1.4 billion transactions a day – an absolute necessity in the high volume FX market. The SETL OpenCSD plaform provides a real-world interface and API structure that will allow us to fully integrate it into our solution.”

Peter Randall, CEO of SETL commented: “We are extremely pleased to be working with Cobalt and their partners on this ground-breaking project. The Cobalt team are leaders in the field of FX processing and our common focus on speed and resiliency makes us natural partners. This is not a proof-of-concept or a prototype; we expect it to be a revenue generating implementation of distributed ledger technology.”

PRESS RELEASE, London, 15 July 2016

SETL Completes Initial Funding and Announces Board Appointments

London, 15 July 2016: SETL, the London based institutional payment and settlement infrastructure based on blockchain technology, announced the completion of its first round of private fundraising today.

SETL also announced additional appointments to its board. Rachel Lomax, former Deputy Governor of the Bank of England and Ed Richards, former CEO of Ofcom, join the SETL board, following the appointment of Sir David Walker as SETL Chairman in December 2015. The company will also shortly announce the name of a further appointment to the Board, who is an experienced executive board member and non-executive in government, including at agencies in the national security sector.

SETL was launched in July 2015 to deploy a multi-asset, multi-currency institutional payment and settlements infrastructure based on blockchain technology. The SETL system will enable market participants to move cash and assets directly between each other, facilitating the immediate and final settlement of market transactions. The SETL system maintains a permissioned distributed ledger of ownership and transaction records, simplifying the process of matching, settlement, custody, registration and transaction reporting.

Since launch, SETL announced a breakthrough in technology, allowing the platform to process over 1.4bn transactions per day; launched their blockchain-powered OpenCSD platform, enabling market participants to run permissioned registry service for payments, settlement and clearing of cash and other financial instruments; and demonstrated Australia’s first working blockchain solution in collaboration with Computershare.

SETL’s Chairman, Sir David Walker, said: “This is a milestone in the development of SETL and one which I believe strengthens the company’s position significantly. At this stage in the company’s growth it is important to choose the right partners and to deliver a dependably resilient product to the market.”

Sir David Walker continued: “We are also delighted to confirm further appointments to the board. Joining as non-executives are Rachel Lomax and Ed Richards. Each of these directors brings a wealth of experience in the financial, regulatory and corporate governance spheres. Their oversight of the growth and development of SETL will be invaluable to the executive team and shareholders alike”. SETL is very mindful of the dependability and resilience of its systems and interfaces and we are delighted to welcome a further colleague to add counsel to the board, regulators, customers and shareholders.

Peter Randall, CEO of SETL, added: “We are pleased to announce that we have closed fundraising with initial partners and have agreed scope on a number of projects. With the recent announcement of our OpenCSD product, the completion of the funding arrangements and our board appointments, I am excited about developments ahead.

We believe we have a technological lead in this area having demonstrated the ability to process billions of transactions a day and are unique in having a financial grade product on the shelf and ready to go. We have already received significant indications of interest in the OpenCSD product and are in the process of choosing the initial implementation cases”.

Randall concluded: “I do not underestimate the challenges of re-tooling some of the most fundamental elements of our financial infrastructure but the benefits of doing so are significant and widespread. We are strongly positioned to commence that transformation and look forward to making further announcements shortly.”

PRESS RELEASE, London, 1 June 2016

SETL Launches Blockchain-Powered OpenCSD Platform

SETL OpenCSD enables market participants to run permissioned registry service for payments, settlement and clearing of cash and other financial instruments

London, 1 June 2016: SETL, the institutional payment and settlement infrastructure based on blockchain technology, has today announced the launch of its blockchain-powered OpenCSD platform. The OpenCSD platform, SETL’s first commercial offering, enables any market participant to commission and run a permissioned registry service for payments, settlement and clearing of cash and other financial instruments. The platform is available today and powered by the SETL blockchain technology, which has been benchmarked to settle billions of transactions a day in real-time.

Peter Randall, CEO of SETL, said: “The time has come to stop talking about the characteristics of blockchain and to start realising its promise. Our OpenCSD platform will revolutionise the way securities depositories and payments systems are organised. A group of participants can now permission a working blockchain platform in a matter of minutes and jointly record and settle changes in ownership. This will help bring competition into a segment of financial markets which has thus far been dominated by quasi-monopolistic incumbents.”

SETL’s OpenCSD platform has been designed to be compatible with existing and forthcoming regulations such as the European CSDR, but is not specific to any particular regulatory model and, as such, is jurisdictionally agnostic. The OpenCSD platform builds an organisational functionality on top of the SETL blockchain engine.

The OpenCSD functionality comprises four main components: 1) a permissioned membership structure; 2) a range of control functions including clearing, settlement and corporate actions; 3) liquidity functionality including collateral and repo facilities; and 4) a secure messaging system which can be used to transmit ISO messages as well as enable bespoke communications between participants in a highly secure environment. Furthermore, the OpenCSD functionality will provide granular identity services by enabling participants to use industry initiatives, such as the Legal Entity Identifier (LEI) system, to allow authority and transaction management. Use of the OpenCSD platform in some applications in some jurisdictions will require prior regulatory approval.

The OpenCSD platform will enable the interaction of different participants, including custodians, registrars and payment institutions. It can be used co-operatively or deployed by a single institution to maintain registers for their own customers. It is asset neutral and works across securities, private equity or as a platform for FX or e-money. Assets held on one instance of the platform can be transferred to other instances subject to the agreement of both parties.

Peter Randall, CEO of SETL, continued, “The OpenCSD platform heralds a new era of interoperability, efficiency and flexibility for issuers and asset owners alike, to collaborate and establish their own settlement destinations. It is a means for market participants to empower themselves and to design services around their own needs and cost expectations. We envisage service providers plugging into these projects to provide facilities such as issuer support, payments and valuation. We expect to work with a number of companies in these areas to support these initiatives.”

The SETL OpenCSD platform is available on a subscription basis and is accessible through a secure user interface and via a functionally-rich API. SETL expects to take on a limited number of subscribers for the first phase of the roll-out. In addition, SETL will establish a development partner programme, which will engage with financial technology companies who wish to design and build functionality around the OpenCSD platform.

PRESS RELEASE, Melbourne, 28 April 2016

Computershare and SETL demonstrate Australia’s first working blockchain solution

Computershare (CPU: ASX) and SETL have today demonstrated Australia’s first working blockchain capital markets solution at Computershare’s annual Investor and Analyst day. The two companies are also pleased to announce a joint initiative to establish securities ownership registers using blockchain technology.

Computershare is the globe’s leading provider of share registrar and receiving agent services to issuers and plays a crucial role in maintaining accurate and complete records of securities including both dematerialized and certificated ownership. SETL is a firm dedicated to bringing blockchain technology to the post-trade environment and has developed its offering to provide financial-grade solutions – including identity, permissioning, smart-contracts and scalability.

The joint initiative will focus initially on the Australian market and will examine the practicalities of establishing an immutable register of securities ownership using blockchain technology. Computershare will play the lead role in bringing together issuers, asset owners, brokers, regulators and market infrastructure providers to propose an open platform which meets the needs of all industry participants. SETL will provide its blockchain technology and expertise to establish a financial-grade solution for this initiative in Australia.

“Computershare is uniquely placed to appreciate how blockchain technology will be specifically applied in maintaining ownership registers. We are already the keeper of definitive legal ownership - the ‘Golden Record’ - for our issuer clients and their stakeholders,” stated Paul Conn, President of Global Capital Markets for Computershare.

“We chose to work with SETL because they have demonstrable working technology coupled with a deep bench of financial services expertise and experience.”

Peter Randall, the CEO of SETL stated: “We are excited to be working with Computershare on this joint initiative. They have an unrivalled position in understanding the needs and requirements of issuers and owners alike. Their focus on client servicing and their understanding of the lifecycle of securities issuance and ownership makes them natural leaders in this field.”

The initial phase will engage a broad group of participants and will be used to build on SETL’s existing working prototype for transferring ownership of securities. The result is expected to be an open platform which can meet a variety of needs including those of issuers, owners, brokers, custodians, regulators, market infrastructure providers and registrars.

PRESS RELEASE, London, 15 December 2015

Sir David Walker joins SETL as Chairman

SETL also appoints Professor Philip Bond as head of Cryptography and Cyber Security, and Caroline Silver, Moelis & Company, to manage fundraising

SETL, the UK based institutional payment and settlement infrastructure based on blockchain technology, has today announced the appointment of Sir David Walker as Chairman.

Sir David Walker is a former Executive Director of the Bank of England and has served as the chairman of Barclays, Morgan Stanley International, the Securities and Investment Board and as deputy chairman of Lloyds TSB. Before his career in financial markets, Sir David served as an Assistant Secretary to the Treasury, for the UK Government. Sir David Walker is a senior member of the influential G30 group which considers and promotes advancements in international payments and settlements.

Commenting on his appointment, Sir David Walker said: ‘I am very pleased to accept this position with SETL. Blockchain is an important advance in settlement technology and SETL has a compelling proposition for its deployment. By simplifying the process of payments and settlement SETL should be able to deliver significant operational efficiencies which will benefit all market participants and, most importantly, reduce costs borne by savers and investors.’

Peter Randall, who has led the establishment of SETL with Anthony Culligan, said: ‘Sir David Walker has an unrivalled depth of experience in finance and his guidance in this project will be invaluable. We are excited to have him accept this post as it strengthens our proposition immeasurably. Sir David will take an active role in leading the board and will support the executive team in their implementation of this new and exciting technology.’

Today, SETL also announced the appointment of Professor Philip Bond as head of their Cryptography and Cyber Security committee. Philip Bond is visiting Professor in the Departments of Engineering Mathematics and Computer Science at Bristol University, specialising in cryptography. He is also a Visiting Fellow in the Oxford Industrial and Applied Mathematics Centre (OCIAM) at the University of Oxford. He has degrees in Physics, Applied Non-Linear Analysis, Finance and Pure Mathematics. Professionally, he has worked as an arbitrage trader at a number of city institutions.

Professor Bond will draw together the leading expertise in cryptography and computer security to form an advisory committee which will assist in the design and implementation of the cryptographic methods to enhance the privacy, security and robustness of the SETL technology.

Both appointments are to commence when SETL has completed its fundraising. Also today, SETL announced that its fundraising efforts will be managed by Caroline Silver at the specialist investment bank Moelis & Company. Moelis & Company, founded by Ken Moelis in 2007, employs 450 bankers in 17 offices worldwide and has specialist expertise in the financial sector, capital markets, mergers & acquisitions and restructuring. Caroline Silver recently advised on the $2.2bn sale of London Metal Exchange and on $8.2bn sale of NYSE Euronext.

PRESS RELEASE, London, 12 October 2015

SETL breaks through 1 billion transactions per day on blockchain

SETL, the institutional payment and settlement infrastructure based on blockchain technology, has today announced that it has established a test network which has broken the 1 billion transactions-per-day capacity barrier for blockchain movements.

SETL also gave more detail of its technology strategy, revealing it had developed novel techniques, to allow it to process transactions in a parallel and effectively remove practical constraints on volume. Anthony Culligan, the SETL CEO, stated, "We are determined to stay on the front foot in technology development and will continue to incorporate the best techniques in our developments. We have a laser focus on financial services ". Culligan further added, "We are not running on a third party platform or powered by an off-the-shelf technology. We develop at the source code level to give us absolute control over how we can deliver our service. Less than 0.5% of our current codebase is licenced technology. This announcement demonstrates the benefits of the approach."

SETL announced its plans to deploy a multi-asset, multi-currency institutional payment and settlements infrastructure based on blockchain technology in July 2015 and is currently in discussion with more than 40 financial institutions including leading banks and infrastructure providers to create a cross-industry solution. The SETL system is designed with financial markets users in mind and will enable market participants to move cash and assets directly between each other, facilitating the immediate and final settlement of transactions. The SETL system maintains a permissioned distributed ledger of ownership and transaction records, simplifying the process of matching, settlement, custody, registration and transaction reporting.

According to the CapGemini/RBS World Payments Report 2015, total non-cash payments globally, including all wholesale and retail electronic payments, amount to 389bn per year, equivalent to 1.06bn movements per day. The top 10 payments markets including North America, the Eurozone, UK, Brazil, China, Japan, Russia and Australia amount to approximately 300bn payments a year or 0.8bn a day. By exceeding 1 billion transactions per day, SETL is addressing one of the fundamental issues of legacy blockchains, which, unlike SETL, are not designed for financial markets and are unable to handle market volumes.

Peter Randall, COO of SETL, said: “We are very excited to break through the 1 billion transactions per day barrier and to be the first to demonstrate that the SETL blockchain can handle the volumes required by the financial services industry, where speed, capacity and reliability are crucial. Our processing capacity now exceeds the volume of every electronic payment made globally on a live-time gross basis. In collaboration with our partners, we know that we have a significant project ahead of us; today is a milestone in this process of bringing a scalable blockchain solution to the world of payments and settlement.

The network deployed by SETL is running across a set of nodes in the UK and Europe and comprises a number of interlinked and communicating blockchains. Assets deployed on one chain can be transmitted to others via a ‘witness node’ which has a presence on the sending and receiving chains.

Anthony Culligan, CEO of SETL, added: “Markets are often segregated by function, jurisdiction and purpose. In addition to the significant performance gains, our development of the witness node technology allows us to create closed groups of participants who have a shared purpose, enabling them to move assets to and from the wider financial world.”

PRESS RELEASE, London, 27 July 2015

Introducing ‘permissioned’ blockchain technology to the post-trade environment, designed with financial market operators in mind.

SETL today announced its plans to deploy a multi-asset, multi-currency institutional payment and settlements infrastructure based on blockchain technology. The SETL system will enable market participants to move cash and assets directly between each other, facilitating the immediate and final settlement of market transactions. The SETL system maintains a permissioned distributed ledger of ownership and transaction records, simplifying the process of matching, settlement, custody, registration and transaction reporting.

The initiative is led by Peter Randall, the former CEO and founder of Chi-X, the pan-European equities trading venue, and Anthony Culligan, an experienced hedge fund investor and CEO and founder of Roolo, a peer-to-peer bitcoin trading site committed to bringing bitcoin and blockchain technology into mainstream use in the City. The SETL management team comprises Anthony Culligan, CEO; Peter Randall, COO; Nicholas Pennington, CTO; and Francois Barthelemy, Head of Corporate Strategy.

Today’s post-trade environment is plagued by the existence of a large number of disparate systems, each of which requires market participants to maintain a plethora of interfaces and reconciliation procedures. The total cost to the finance industry of clearing, settling and managing the post-trade environment is estimated at between $65bn and $80bn per year . The hierarchical nature of the current environment requires investors to employ specialist agents at every step of the clearing and settlement process, increasing cost and complexity. By removing the need for multiple ledgers, multiple single points of failure and multiple processing bottlenecks SETL will result in very significant processing speed improvements and at the same time remove multiple cost layers for the benefit of all participants.

Alongside this, regulators are demanding greater transparency of ownership and immediate transaction reporting to allow them to detect market abuses and to monitor, in real time, systemic market risks. The SETL blockchain solution is completely compatible with existing regulatory initiatives and in particular has been designed to accommodate new requirements such as LEI (Legal Entity Identifier) fields.

The SETL system has been designed from the ground up to meet the needs of the finance industry and eliminate some of the concerns raised about the use of blockchain technology for financial markets. These include anonymity, typical for ‘permissionless’ blockchains such as the bitcoin blockchain, which would present challenges to AML / KYC obligations of financial institutions, and the limited capacity and speed of current blockchains, not designed to handle the required volume of financial transactions. SETL is a real-time, real-world system and as such will offer connectivity and compatibility with existing work flows, systems, standards and regulations.

With SETL, users will deploy public/private key technology to assert transactions. However, where the bitcoin blockchain is limited to only 7 transactions per second globally, the SETL infrastructure has demonstrated speeds of up to 5,000 transactions per second in tests and is expected to reach speeds of 100,000 transactions per second in an enterprise environment. Such speeds are achievable because SETL will operate on a ‘permissioned’ basis rather than the ‘permissionless’ environment bitcoin operates in. The SETL system will require that each public key used is certified by one of a number of entities that will undertake due diligence and will tie each key back to an LEI. This will ensure that regulators and other parties that have a legitimate interest will be able to identify the underlying users. In addition, external parties such as regulators, auditors, issuers and other interested parties will have full real-time transparency of relevant transactions.

The SETL business case shows solid revenue flows and is intended to act as a ‘beacon’ for UK and European institutions to coalesce around. Most financial institutions will be able to operate both as providers and consumers.

Peter Randall, COO, who is credited with revolutionising the equity trading markets in Europe through the establishment of Chi-X Europe, said: ‘With SETL, we aim to do to the post-trade environment, what we did to exchange trading with Chi-X. Clearing and settlement processes are fragmented, cumbersome, costly and in need of technological innovation and simplification. We are currently in discussion with a number of first tier institutions who are looking to commercialise blockchain technology. Our aim is to be platform, exchange, currency and asset agnostic. When you have agreed a transaction, SETL will be the way to simultaneously move the consideration and the asset as well as provide a ‘golden record’ of the transaction.

Anthony Culligan, CEO, added: ‘Our industry needs a blockchain technology designed specifically with the requirements of financial markets in mind. Retro-fitting to the bitcoin blockchain using add-ons such as the Open Asset Protocol is a technical non-starter as it does not have the capacity or functionality to properly service financial markets. Understanding how financial markets work has been key to the design process so far. Solutions in the world of finance need to address practical issues such as capital usage, bank liquidity and regulatory permissions. SETL is the product of the decades of financial markets expertise of its founders as well as genuine technical innovation’.