Barclays, Credit Suisse, KBC, SIX and Thomson Reuters are all onboard for the project, which was kickstarted by UBS in the innovation lab at London's Level39 in a bid to improve data quality as part of the impending implementation of the MiFID II/MiFIR regulation in January.

Under MiFID II, institutions are expected to have an individual Legal Entity Identifier (LEI). The UBS project is aiming to streamline the process of reconciling the reference data which pertains to the LEI for each entity - such as industry classification, identifiers and European Securities and Markets Authority data.

Under the plan, the specific reference data for each Legal Entity is cryptographically concealed at each institution using hashing, with the source data held and remaining within the participating institution.

Only the hashed data is submitted, anonymously, to an Ethereum private blockchain powered by Microsoft Azure. The Ethereum smart contracts then reconcile the data against the consensus and provide each participant, via a user interface, the ability to search and view their own specific data in real-time. Users can then quickly see where the anomalies lie in the data.

Currently, the project is in the pilot phase, with a mock-live environment using 22,000 non-sensitive LEI reference attributes for cash equity issuers. The pilot is set to finish by the end of January, with a further staged rollout "dependent on the findings".

Christophe Tummers, head, data, UBS, says: "Traditionally, a firm such as ours quality checks data against multiple sources but we do not have a quality baseline against peers. Through using blockchain-inspired smart contracts, the reconciliation of data can happen in almost real-time for all participants, anonymously."