Asset Services Clearing and Settlement News

State Street has partnered with Paxos, through which it will integrate State Street custodial services into the Paxos Settlement Service.

As part of the pilot tests, State Street, through its Digital and Alpha divisions, was able to simulate stock settlement and custody on the Paxos platform and asset movements with Credit Suisse.

Paxos says its settlement service is a modern clearing platform designed to meet the challenges posed by opaque margin, slow settlement cycles and high costs in today’s settlement environment. Its private, permissioned blockchain is designed to allow two parties to securely settle securities transactions through a modern clearing agency.

According to project participants, the State Street Digital and Alpha divisions, along with Credit Suisse, developed the workflow and system adjustments to test the potential for transparent T+0 settlement.

They report that the testing process confirmed that the Paxos platform is ready to immediately provide same-day settlement to industry participants. This contrasts with the evolution of the settlement lifecycle using the existing infrastructure, which offers the prospect of a T+1 settlement in 2024.

By leveraging Paxos’ settlement service for institutional settlement, State Street was able to send settlement instructions to Paxos for settlement while providing the messaging required to interface with existing settlement systems.

Commenting on the initiative, Charles Cascarilla, CEO and Co-Founder of Paxos, comments: “The Paxos Settlement Service will revolutionize core market operations as our modern infrastructure improves efficiency, reduces risk, increases innovation and ensures transparency. Paxos technology shows how competitive clearing solutions can move the market forward in a positive way.

Nadine Chakar, Head of State Street Digital, said: “Our team is extremely pleased to have collaborated with Paxos, Credit Suisse as well as State Street’s Alpha team on this exciting industry initiative to facilitate a transparent T+0 settlement.”

She adds, “State Street Digital was created to drive innovation and address the digital transformation of the industry, and this pilot project aligns with our larger company goal of supporting customers across the frontline. , middle and back office.

“It also confirms that the use of blockchain technology will help automate the lifecycle of a transaction, reduce costs, and could eliminate the need for traditional reconciliation processes used in today’s settlement environment. .”

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