Paxos Trust Company, a New York-regulated financial institution that digitises assets, launched its Paxos Settlement Service, which can settle US-listed equity trades between broker-dealers Credit Suisse and Instinet, LLC.
Paxos Settlement Service is a private, permissioned blockchain solution designed to allow two parties to bilaterally settle securities trades directly with each other.
The newly operational service represents the first live application of blockchain technology for listed US equities.
Credit Suisse’s head of digital asset markets, Emmanuel Aidoo, said that the initiative has the potential to deliver “great efficiency and cost savings to the post-trade cycle”.
In launching the service with Credit Suisse and Instinet, Paxos is allowing for the simultaneous exchange of cash and securities to settle trades.
Additionally, a third participant, Societe Generale, is set to begin settling US-listed equities trades with Paxos Settlement Service.
Paxos noted that it will submit its application for clearing agency registration with the SEC in 2020 so that it can offer the Paxos Settlement Service to all street side broker-dealers to settle US-listed equities.
Charles Cascarilla, CEO and co-founder of Paxos, stated: “Launching Paxos Settlement Service under no-action relief is the first step in our journey to transform post-trade infrastructure in the securities industry.”
He explained: “We’ve worked closely with Credit Suisse and Instinet to build a solution that can deliver long-term cost benefits and together we will refine the system in a live environment. Our upcoming application for clearing agency registration demonstrates our dedication to modernising market structure on a large scale.”
Luke Mauro, global head of operations at Instinet, commented: “Instinet has always been committed to finding new and innovative ways to integrate technology into the trading life cycle to improve efficiency and benefit our clients.”
“Going live with Paxos Settlement Service will bring about significant digital transformation to this part of the trading process and help to optimise securities settlement,” Mauro added.
