Instinet and Credit Suisse transforms traded stocks settlement with Paxos

By Pavithra R

Paxos, a regulated financial institution building infrastructure to enable movement between physical and digital assets, has announced that Instinet and Credit Suisse settled US-listed equities trades on a same-day settlement cycle ( T+0) via Paxos Settlement Service. 

Paxos Settlement Service is a private, permissioned blockchain solution built to allow 2 parties to bilaterally settle securities trades directly with each other. The platform is interoperable with the legacy clearing system and facilitates settlement on any time cycle.

“Settlement in US equities is opaque and laden with unnecessary delays, capital costs and expenses. We are working hard to improve settlement for the benefit of all market participants. An upgraded settlement system can create safer, fairer and more open capital markets that foster innovation. 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,” said Charles Cascarilla, Chief Executive Officer and Co-Founder of Paxos.

The transaction is the first live application of blockchain technology for the US equities market and enables the simultaneous exchange of cash and securities to settle trades. Paxos Settlement Service has been settling trades daily 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 platform operates under No-Action Relief from the Securities and Exchange Commission (SEC) Staff. Paxos will apply for full clearing agency registration with the SEC, and hoping to secure registration in 2021. If granted a clearing agency registration, the Paxos Settlement Service plans to provide enhanced flexibility around their settlement cycles, ranging from T+2 to T+0, optimized according to their trading and asset management strategies. Additionally, Paxos will run multilateral netting processes in real-time to ensure efficient, fast and transparent net settlement of transactions.

“Innovation in blockchain technology is incremental. We’re excited to make progress in forging a path to faster settlement times at lower costs in public equities. These advancements will ultimately benefit the broader market as more firms join the platform. We’re pleased to work with Paxos and Instinet to advance this technology, which will help unlock capital, increase liquidity and reduce risk over time,” said Emmanuel Aidoo, Head of Digital Assets Markets at Credit Suisse.

Founded in 2012, Paxos is on a mission to modernize finance by mobilizing assets at the speed of the internet. The company aims in making it possible to move any assets anywhere, instantly and thereby democratize access to a new, global, frictionless economy.