BNP Paribas’ investment management arm has partnered with capital markets fintech Digital Asset to design trade and settlement apps which can be integrated with exchanges transitioning to blockchain technology.
BNP Paribas Securities Services said Tuesday it has allied with the fintech to develop software tools for market participants in the Australian Securities Exchange and the Hong Kong Exchange as they pivot to blockchain-based trading and settlement platforms themselves. The apps will give users real-time access to market information in the revamped exchanges, according to BNP Paribas.
The companies said they will first roll out a “smart elections” service for corporate actions, allowing investors to receive information on dividend reinvestment, purchase offer decisions and other relevant moves at the same time. Slated for release in 2021, the tool is meant to cut down processing time, boosting efficiency and helping investors make decisions with the latest market information.
The service will use Digital Asset’s smart contract modeling language, which generates self-executing transaction agreements that can be carried out instantaneously and without the need for a central authority.
The asset manager’s new programs will connect to the ASX’s new blockchain-based platform for clearing, settlement and other post-trade services, which the exchange has proposed to debut in April 2022. In 2016, the exchange tapped Digital Asset to develop, test and ultimately roll out a post-trade platform for the cash equity market using distributed ledger technology, which is also known as blockchain.
The software tools will also plug in to HKEX’s Synapse, a blockchain tool designed to reduce settlement risk for trades involving mainland China shares. Digital Asset has reportedly developed a smart contract app for the exchange that could automatically carry out international participants’ settlement activities, which for them often take place overnight.
BNP Paribas’ new apps will also be available to clients in markets that have not transitioned to blockchain platforms, the company said.
“BNP Paribas Securities Services’ vision of bringing real-time post-trade information to clients and leveraging ... smart contracts to automate client process flows at scale is an indication of just how transformative [digital ledger technology] will be for custody services,” said Jon Rout, business development director for Digital Asset’s Asia Pacific division.