A London startup which boasts the former chairman of Barclays bank on its board has launched a new blockchain platform for financial institutions which it claims is the first of its kind.
Several organisations are in the race to build a distributed ledger platform with blockchain technology, which can be used across the industry for processing transactions more quickly and simply than current methods That includes the R3 consortium of some of the world's biggest banks and Digital Asset Holdings, run by former JP Morgan banker Blythe Masters.
But Setl, founded by several industry veterans and chaired by Sir David Walker, is the first to launch a working blockchain-based platform which can be used by banks and financial institutions for settling transactions – from securities to foreign exchange.
OpenCSD is Setl's first commercial launch and will offer companies the chance to adopt blockchain without having to develop the technology itself, which can be difficult for smaller firms with no dedicated innovation or digital teams.
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“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," said Setl chief executive and founder Peter Randall, who previously founded equities trading platform Chi-X.
"A group of participants can now put into practice 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.”
The platform is compliant with existing and forthcoming regulation including Europe's Central Securities Depositories Regulation (CSDR).
OpenCSD can be used in an institution or between them and it could be used, for example, to keep an internal ledger for non-listed shares of a fund, or for settling post-trade expenses related to forex to reduce the cost.
"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," said Randall.
Speaking to City A.M., he acknowledged other groups are attempting to create their own blockchain-based platform, but said Setl's OpenCSD was the "first fully functioning financial grade, operational, deployable blockchain".
On potentially working with other such firms, Randall said: "We would be happy to work together, but no one else has this [working technology] yet."
The firm recently partnered with stock transfer and registrar company Computershare, to create the first blockchain for recording securities ownership.
OpenCSD can be used by commercial firms on a subscription basis, but Randall did not rule out the platform being made available on other terms for other organisations in order to promote innovation in blockchain technlogy.
The firm believes its debut now will give it first mover advantage in the burgeoning blockchain industry, which is increasingly attracting the interest of major banks and could soon be worth billions. Financial institutions are particularly interested in the technology as a means of reducing costs.
Santander last week revealed it is piloting a blockchain-based payments app among staff, built with the help of Ripple, a US-based blockchain startup in which Santander's venture arm became an investor in last year. Meanwhile, Barclays partnered with payments app startup Circle, which uses blockchain to process payments.
R3, a consortium of some of the world's biggest banks and financial institutions, including Barlclays, HSBC and Goldman Sachs, among others, is currently in the test phase of its own platform, Corda.
Setl is privately funded by its founders, but hired Caroline Silver of Moelis & Company late last year to lead fundraising for the startup which Randall told City A.M. was an "ongoing process" at present.