Digital Asset Holdings closed a funding round exceeding $50 million, with backing from Citi, BNP Paribas, JP Morgan, ABN AMRO, Accenture, the Australian Securities Exchange, Broadridge Financial Solut
Digital Asset Holdings closed a funding round exceeding $50 million, with backing from Citi, BNP Paribas, JP Morgan, ABN AMRO, Accenture, the Australian Securities Exchange, Broadridge Financial Solutions, CME Ventures, Deutsche Börse Group, ICAP, Santander InnoVentures, the Depository Trust & Clearing Corporation, and PNC Financial Services Group.
The company develops blockchain applications for financial services firms, focusing on private, permissioned networks that handle trading, clearing, and settlement. The platform aims to cut infrastructure costs while improving efficiency, security, compliance, and settlement speed.
Digital Asset also expanded its board. The new directors are Catherine Flax, head of commodity derivatives and foreign exchange at BNP Paribas; Ashwin Kumar, group head of product development at Deutsche Börse; Sanoke Viswanathan, chief administrative officer of JP Morgan's corporate and investment bank; and Mike Bodson, chief executive of the Depository Trust & Clearing Corporation.
The Australian Securities Exchange committed to the deepest investment. ASX paid A$14.9 million, about $10 million, for a 5 percent stake and hired Digital Asset to build a blockchain-based post-trade system for the Australian equity market.
The project runs in two phases. The first, finishing by the end of 2016, replaces ASX's existing trading and risk management systems. The second phase targets post-trade services, including clearing and settlement for the cash equities market.
Elmer Funke Kupper, ASX's managing director and chief executive, said the first phase "is designed to bring the benefits to life and to test if blockchain technology can work at the scale of the Australian equity market." He added: "By building a solution alongside the existing CHESS system, all stakeholders can participate fully in the innovation process and have confidence in the clearing and settlement processes that underpin one of the top 10 equity markets in the world."
ASX announced in February 2015 that it would replace its Clearing House Electronic Subregister System, known as CHESS. Kupper attributed the decision to stagnation in post-trade services. "There has been very little innovation in the post-trade services that operate around the world for the better part of 20 years," he said.
"Rather than replace CHESS with a new version that is based on the same legacy processes that operate in the market today, we should aim to re-engineer and simplify those processes to deliver significant benefits to the users of the market," Kupper said.
Both companies plan to consult with Australian regulators and government agencies on the blockchain solution's potential benefits and to ensure that any new post-trade platform meets regulatory, operational, and security standards for domestic financial markets.
