Paxos is seeking to disrupt a multiple quadrillion dollar corner of Wall Street. And it’s convinced two financial heavy hitters to get behind it.
October 29, 2019, | AtoZ Markets – The New York-based financial technology firm announced Monday that the Securities and Exchange Commission had issued a no-action letter that will allow the company to test its new settlement service based on the blockchain. Two European banks are among the first to register on the platform, which will allow the settlement of certain securities transactions in some dark pool markets, according to Melayna Ingram, director of product management at the company.
Paxos Is Seeking Wall Street
Credit Suisse and Societe Generale are participating in this trial. That will be the first-time securities and will be traded outside the former clearing system, according to Paxos. In the US stock market, DTCC is behind Wall Street, facilitating the clearing and settlement of $ 4 trillion worth of securities. As part of the Paxos settlement service, participating companies will now be able to trade bilaterally and settle the securities on Paxos’ authorized blockchain rather than through the National Securities Clearing Corporation (NSCC).
They have been working on it for about 18 months, says Ingram. They have worked with many large companies on the sales and purchasing side as well as with other suppliers to work on the initial design and marketing approach.
The lawsuit will only affect a small part of the Wall Street trading. For starters, participating companies will trade a limited number of securities. And they will cap at 100,000 shares a day, according to Ingram.
Nevertheless, Paxos promises a faster alternative to Wall Street. In there, trades are usually settled and cleared, in some cases, several days after their execution. According to Mr. Ingram, the change of ownership of cash and securities will take place instantly at the settlement of a trade.
According to Emmanuel Aidoo, head of digital asset markets at Credit Suisse-
They believe that the securities settlement process can significantly optimize through the blockchain, and with Paxos Settlement Service. Besides, they will directly benefit from these efficiencies first hand. Moreover, they see this as an important milestone in their Digital Asset Strategy. Also, they anticipate opportunities to leverage this product across many asset classes in the future. During the pilot project, Paxos will not charge for the service.
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