Using Paxos Settlement Service, State Street and Credit Suisse can respond to the SEC request for pathways to T+0 settlement
Paxos, the regulated blockchain infrastructure platform, has partnered with State Street, one of the world’s leading providers of financial services to institutional investors, to integrate State Street’s custodial services into the Paxos Settlement Service. As part of the pilot, State Street was able to simulate the settlement and custody of shares on the Paxos platform and asset movements with Credit Suisse more efficiently.
Paxos Settlement Service is a modern clearing platform built to address the structural problems of opaque margin, slow settlement and high costs impacting today’s market participants. The private, permissioned blockchain solution is designed to allow two parties to safely settle securities trades through a modern clearing agency. By leveraging Paxos Settlement Service for institutional settlement, State Street was able to send settlement instructions to Paxos for cost effective settlement while still delivering the required messaging to interface with existing settlement systems.
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State Street, through its Digital and Alpha divisions, along with Credit Suisse, delivered the workflow and system adjustments to test the functionality of seamless same day (T+0) settlement. The result highlighted the Paxos platform’s flexibility and readiness to immediately deliver T+0 settlement for industry participants. Paxos can deliver T+0 settlement today while the legacy infrastructure has a goal of achieving T+1 settlement in 2024.
Charles Cascarilla, CEO and Co-Founder of Paxos, commented, “The Paxos Settlement Service will revolutionize core market operations as our modern infrastructure improves efficiency, reduces risk, increases innovation and provides transparency. State Street is a market leader and their ability to easily integrate demonstrates how the Paxos platform is interoperable with today’s systems and creates a pathway to the digital world. Market participants need an environment that fosters faster, safer, fairer and more open markets. Paxos technology shows how competitive clearing solutions can positively drive the market forward.”
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Nadine Chakar, head of State Street Digital, said, “Our team is incredibly pleased to have collaborated with Paxos, Credit Suisse as well as State Street’s Alpha team on this exciting industry initiative to facilitate seamless same day (T+0) settlement. State Street Digital was created to help drive innovation and address the industry’s digital transformation, and this pilot is consistent with our firm’s broader focus on supporting clients across the front, middle and back office. It also further validates that the use of blockchain technology will help automate the life cycle of a trade, reduce costs and could eliminate the need for the traditional reconciliation processes used in today’s settlement environment.”
Chris Rice, Head of Digital Asset Markets at Credit Suisse, added, “We are delighted to partner with State Street and Paxos on an initiative that can potentially create financial benefits for our clients. Credit Suisse is committed to innovation and moving the industry forward by supporting the adoption of efficient, low-cost digital banking services in public equities. This collaboration marks continued progress in digital market infrastructure, ultimately benefiting the broader market.”
Paxos technology allows for continuous netting and settlement – without the delays and inflexibility of the legacy system’s batch processing – and reduces cost and capital commitments. Additionally, Paxos leverages a safe, efficient and transparent margin calculation so there are no surprises to market participants.
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