U.K.-based startup SETL was granted a license from the Autorité des Marchés Financiers, the French financial watchdog, to run a blockchain-powered central securities depository (CSD).
Blockchain Settlement Startup Promises to Help Cut Collateral Held up in Payment Systems
As one of Europe’s biggest securities settlement systems, France will be at the forefront of “market plumbing” processes, where cash is exchanged for securities.
SETL argues that its distributed ledger technology can speed up what is now a slow and inefficient back-office settlement and help cut the amount of collateral held up in global payment systems.
The depository license connects SETL to the eurozone’s Target2-Securities engine, which offers centralized delivery-versus-payment settlement in central bank funds across all European securities markets. SETL’s CSD is scheduled to go live in early 2019, but official approval for the link to T2S platform is likely to be granted in the coming weeks.
Designed for financial markets, rather than cryptocurrencies, the startup’s blockchain was designed as a permissioned ledger to allow networks of trusted parties to see it. Some critics see the blockchain application more of a hype as the firm’s CSD is not expected to have a meaningful impact on the market and existing technologies for securities settlement, according to the Financial Times.
While SETL’s OpenCSD product just received a green light from European authorities to operate, its other market infrastructure, IZNES, continues to expand. The blockchain-powered investment and record-keeping solution has over 25 major European fund managers participating and is likely to become the largest global blockchain by both value and volume, according to Philippe Morel, the recently appointed CEO.
Morel, a former consultant at Boston Consulting Group, replaced co-founder Peter Randall in the role of CEO. Randall has become president at the company chaired by Sir David Walker.
“We are delighted to welcome Philippe Morel as CEO. He brings a wealth of experience in the capital market, financial, and regulatory spheres and we are very pleased to have attracted such an impressive talent.”
Launched in July 2015 to deploy a multi-asset, multi-currency institutional payment and settlements infrastructure based on blockchain technology, SETL allows market participants to move cash and assets directly between each other, facilitating the immediate and final settlement of market transactions. The SETL system simplifies the process of matching, settlement, custody, registration, and transaction reporting by maintaining a permissioned distributed ledger of ownership and transaction records.
Citi and Credit Agricole both took stakes in the company in February 2018, joining a number of shareholders, including S2iEM, Deloitte, and Computershare.
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