Peter Randall, the former CEO and founder of Chi-X, is once again looking to upset established market mechanisms with the launch of an institutional payment and settlement system based on blockchain technology.
Randall has partnered with Anthony Culligan, an experienced hedge fund investor and CEO and founder of peer-to-peer bitcoin trading venue Roolo, to launch the SETL system, with a view to streamlining post-trade infrastructures.
He says the SETL system will enable market participants to move cash and assets directly between each other, facilitating the immediate and final settlement of market transactions. SETL maintains a permissioned distributed ledger of ownership and transaction records, simplifying the process of matching, settlement, custody, registration and transaction reporting.
Says Randall: ‘With SETL, we aim to do to the post-trade environment, what we did to exchange trading with Chi-X. Clearing and settlement processes are fragmented, cumbersome, costly and in need of technological innovation and simplification. Our aim is to be platform, exchange, currency and asset agnostic. When you have agreed a transaction, SETL will be the way to simultaneously move the consideration and the asset as well as provide a ‘golden record’ of the transaction."
Other members of the SETL team include Nicholas Pennington - formerly of Robert Fleming Securities, JP Morgan, Powe Capital and F&C Partners - as CTO, and Francois Barthelemy - an alumni of Robert Fleming Securities, Morgan Stanley and F&C Partners - as head of corporate strategy.
Culligan says SETL has been designed from ground up to meet the needs of the finance industry and eliminate some of the concerns raised about the use of blockchain technology for financial markets, particularly around issues of anonymity and robustness.
He says: "Understanding how financial markets work has been key to the design process so far. Solutions in the world of finance need to address practical issues such as capital usage, bank liquidity and regulatory permissions. SETL is the product of the decades of financial markets expertise of its founders as well as genuine technical innovation."
The SETL infrastructure has demonstrated speeds of up to 5000 transactions per second in tests, says Culligan, and is expected to reach speeds of 100,000 transactions per second in an enterprise environment.
Culligan and Randall insist that the business case shows solid revenue flows and say that the company is in talks with a number of first tier institutions who are looking to commercialise blockchain technology.