Instinet and Credit Suisse have conducted the first live trades of US-listed equities on a T+0 settlement timeframe using blockchain technology from Paxos.
Conducted in March, the trades occurred at 11 AM ET and 3 PM ET and were settled at 4:30 PM ET, demonstrating the platform’s ability to enable same-day settlement for trades conducted throughout the day.
Paxos Settlement Service is a private, permissioned blockchain solution designed to allow two parties to bilaterally settle securities trades directly with each other.
The platform has been settling trades daily for more than a year, and is operating on the standard T+2 settlement timeframe. The same-day settlement was conducted with live trades to demonstrate the future capability of the platform.
The Depository Trust and Clearing Corporation is close to completing work on a prototytpe settlement system based on distributed ledger technology, which could act as the precursor to a US move to a T+1 settlement cycle. The DTCC has put a two-year timeframe for the project to reach fruition and dismissed the notion of same day settelement as a realistic or desirable objective.
Charles Cascarilla, CEO and co-founder of Paxos, states: “Settlement in US equities is opaque and laden with unnecessary delays, capital costs and expenses. Modern technology makes the risks of the current system obsolete while also enabling greater trading liquidity with greater ownership transparency. Paxos has built the only alternative solution that significantly alleviates risk and offers immediate benefits for market participants.”
Paxos is currently applying for full clearing agency registration with the SEC amid plans to run multilateral netting processes in real-time to ensure fast net settlement of transactions.