UK fintechs conduct blockchain settlement test with NatWest and Santander
UK fintechs Fnality, Nivaura and Adhara have partnered with NatWest and Santander to conduct a proof-of-concept involving the issuance of a tokenised security on a public blockchain.
The payment leg of the transaction was conducted through a new, distributed ledger technology-enabled (DLT) payments system.
The collaboration saw the group conduct the first cross-chain pilot debt transaction on the public Ethereum blockchain and the Fnality Payment System (FnPS).
The test was designed to demonstrate the benefits of DLT in offering near-instant settlement in capital markets and payments.
Global banking consortium Fnality is creating a network of distributed payment systems using blockchain technology.
It says the test means it is now one step closer to the 2022 launch of FnPS, which will enable wholesale payments in real time with near instant settlement in a central bank money-backed digital cash asset.
Fnality leveraged Nivaura’s low-code/no-code transaction management workflow automation technology to structure, execute and settle a tokenised primary securities issuance.
It also partnered with Adhara, a software company that provides real-time, multi-currency liquidity management and international payment solutions, to facilitate the payment leg via the creation of an Ecosystem TestNet.
Fnality says the TestNet is an early working example of how its DLT-based payment systems will help facilitate intraday liquidity savings, end-to-end repurchase agreements and interbank intraday FX swaps.
NatWest and Santander acted as the two counterparties to the transaction, with NatWest as dealer and issuer and Santander the investor.
All parties claim this pilot transaction is a “major step” in the adoption of digital and automated technologies in the industry.
Nivaura co-founder Vic Arulchandran says: “This proof-of-concept builds on our ethos of innovation in primary capital markets, particularly as the first firm to use DLT to issue and settle the world’s first legally compliant tokenised securities on public blockchain.”
NatWest head of digital capital markets Christopher Agathangelou adds: “Distributed ledgers and digital assets will help level the playing field by lowering the barriers to entry to financial markets for both large frequent issuers and smaller enterprises.”