The fintech sector remains one of the most progressive industries of the blockchain movement. The technology’s attractive properties and far-reaching potential have lead many in the financial industry to consider adopting it for a number of innovative ideas, including securities, central bank processes, and now the bullion market.
Euroclear, a Belgium-based financial services company, and Paxos, a blockchain solutions firm, have just announced the successful completion of a two-week pilot for a bullion blockchain settlement service, Euroclear Bankchain.
Euroclear Bankchain uses the strength of Euroclear’s financial competence and Paxos’ blockchain platform, BankchainTM, to supplement settlements and payment delivery in the London bullion market. The platform hopes to minimize risk, reduce capital charge, and reduce balance sheet constraints. To date, over 600 over-the-counter (OTC) test bullion trades were conducted over the Euroclear Bankchain platform.
The pilot involved a number of participants from the Euroclear Bankchain Market Advisory Group, a collection of market leaders working alongside Euroclear and Paxos in utilizing the new service. This group includes a number of key players in the London bullion market, such as Scotiabank, Société Générale, Citi, MKS PAMP Group and INTL FCStone.
Seth Phillips, Bankchain Product Director at Paxos, states:
"The pilot has been very useful in helping us further refine the Bankchain platform. The level of engagement from market participants was extensive and they were excited by settlements enabled on a real blockchain for the first time and to see how quickly their feedback could be incorporated into the platform."
Over the course of the next year, Euroclear and Paxos will continue to work closely with key players in the London bullion market to consolidate feedback from the Euroclear Bankchain pilot program. However, a market simulation is still scheduled to occur early next year in preparation of the production launch later in 2017.
Read the full press release:
NEW YORK and LONDON, Dec. 19, 2016 -- Euroclear and Paxos™, a financial technology company delivering pioneering blockchain solutions, are pleased to announce the successful completion of the first pilot for Euroclear Bankchain, the new blockchain settlement service for London bullion due to go live in 2017. Over 600 OTC test bullion trades were settled on the Euroclear Bankchain platform over the course of the two-week pilot.
A number of leading market participants in the London bullion market were involved in the pilot, including Scotiabank, Société Générale, Citi, MKS PAMP Group and INTL FCStone. All are part of the Euroclear Bankchain Market Advisory Group that now includes 17 participants working with Euroclear and Paxos in the roll-out of the new service.
Euroclear Bankchain combines Euroclear's strengths as an international securities depository and settlement provider and Paxos' flagship blockchain technical platform, Bankchain™, to bring instant settlement and simultaneous delivery versus payment to the London bullion market. The settlement of unallocated gold is a very capital-intensive process. Euroclear Bankchain will significantly minimise risk, leading to a reduced capital charge and reduced balance sheet constraints.
"The pilot has been very useful in helping us further refine the Bankchain platform," said Seth Phillips, Bankchain Product Director at Paxos. "The level of engagement from market participants was extensive and they were excited by settlements enabled on a real blockchain for the first time and to see how quickly their feedback could be incorporated into the platform."
Angus Scott, Director, Product Strategy and Innovation at Euroclear added, "This is a real first step in bringing a new settlement capability to the London bullion market that will help lower risk and simplify the post-trade process."
Over the coming months, Euroclear and Paxos will continue to work closely with the London bullion market and integrate feedback from the pilot into the Euroclear Bankchain service. Another market simulation will run early next year in preparation for a production launch later in 2017.
Paxos is a financial technology company delivering pioneering blockchain solutions for global financial institutions. Its flagship service is Bankchain, a next-generation blockchain settlement platform that is transforming post-trade across capital markets. Bankchain delivers instantaneous settlement and greater automation, offering market participants reduced counterparty risk, lower capital requirements and increased operational efficiencies. Paxos' management team is led by CEO and Co-Founder Charles Cascarilla and its board of directors includes former FDIC chair Sheila Bair, former Senator Bill Bradley, former chair of the Financial Accounting Standards Board Robert Herz, former chairman, president & CEO of Lotus Development Corporation Jim Manzi and former NYSE CEO Duncan Niederauer.
Euroclear group is the financial industry's trusted provider of post trade services. At the core, the group provides settlement, safe-keeping and servicing of domestic and cross-border securities from bonds, equities and derivatives to investment funds. Euroclear is a proven, resilient capital market infrastructure committed to delivering risk-mitigation, automation and efficiency at scale for its global client franchise.
The Euroclear group includes Euroclear Bank which is rated AA+ by Fitch Ratings and AA by Standard & Poor's as well as Euroclear Belgium, Euroclear Finland, Euroclear France, Euroclear Nederland, Euroclear Sweden and Euroclear UK & Ireland. The Euroclear group settled the equivalent of EUR 675 trillion in securities transactions in 2015, representing 191 million domestic and cross-border transactions. By December 2015, the group held EUR 27.5 trillion in assets for clients.
For more information about Euroclear, please visit euroclear.com