Brussels/London – 21 March 2022 – Euroclear is pleased to announce an investment in Fnality, an international consortium of global banks and financial market infrastructures focused on building regulated payment systems to support the adoption of tokenised assets and marketplaces.
Euroclear further advances its DLT strategy with investment in Fnality
As Euroclear develops its future Distributed Ledger Technology (DLT) capabilities, it is partnering with Fnality with the intention to provide an innovative solution for the settlement of digital securities against digital cash on DLT. The solution aims to increase speed and efficiency for a range of post-trade operations from primary market issuance to secondary market and collateral trades, and servicing interest payments.
This investment follows the recent Euroclear-led Central Bank Digital Currency (CBDC) experiment to settle French government bonds on DLT, commissioned by the Banque de France. The experiment with the French market confirmed that blockchain technology is suitable to manage post-trade market operations in CBDC.
In recent years, market participants have demonstrated a wider acceptance of DLT and its potential for significantly transforming global capital markets. Regulators are starting to create the conditions to allow for its use in securities markets, such as the EU DLT pilot regime. With DLT moving from experimentation to commercialisation, industry-supported and Central Bank supervised solutions for digital cash on DLT, like Fnality are becoming increasingly important.
The Bank of England (BoE) recently announced the launch of a new omnibus account model to enable its real-time gross settlement (RTGS) service to interface with a wider range of innovative payment systems, including those using DLT. Effectively, an operator of a payment system can hold funds in the omnibus account to fund its participants’ balances with central bank money; and support a wide range of high-value payments, including a commercial bank buying government bonds. Fnality has applied for the BoE omnibus account and is due to go live with its Pound Sterling Fnality Payment System in October 2022.
Rhomaios Ram, CEO Fnality International said: “The institutional commercialisation of DLT is being realised through Fnality’s creation of a network of distributed payment systems using blockchain technology. As we progress from testing to real-world implementation, welcoming Euroclear Group as an investor into the Fnality International consortium will significantly enhance the diversification of Fnality’s network and expand our industry footprint, especially around Financial Market Infrastructure. This has obvious positive implications for the execution of our business and use case strategy.”
Lieve Mostrey, CEO Euroclear Group, commented: “As an open financial market infrastructure our approach to innovation has always been to develop services in close co-operation with clients and pioneering networks and infrastructures. We are pleased to be working with Fnality and our clients in shaping a cutting-edge solution on wholesale digital cash and digital securities settlement for the benefit of the whole industry.”
Euroclear group is the financial industry’s trusted provider of post trade services. Euroclear provides settlement and custody of domestic and cross-border securities for bonds, equities and derivatives to investment funds. Euroclear is a proven, resilient capital market infrastructure committed to delivering risk-mitigation, automation and efficiency at scale for its global client franchise.
The Euroclear Group comprises Euroclear Bank, the International CSD, as well as Euroclear Belgium, Euroclear Finland, Euroclear France, Euroclear Nederland, Euroclear Sweden and Euroclear UK & International. The Euroclear Group settled the equivalent of EUR 992 trillion in securities transactions in 2021, representing 295 million domestic and cross-border transactions, and held EUR 37.6 trillion in assets for clients by end 2021.
Founded in 2019, Fnality International is a consortium of global banks that is building regulated payment systems to support the growing industry adoption of tokenised assets and marketplaces. By using distributed ledger technology (DLT), Fnality offers central banks a simpler, faster, safer, and more resilient system for managing payments.
With a global roll-out set to commence in 2022, Fnality International’s network of distributed Financial Market Infrastructures (dFMIs) will provide a near-real-time 24/7 settlement capability in a central bank money-like digital cash asset while facilitating interoperability with other platforms, allowing banks to significantly reduce their intraday liquidity requirements, and unlocking the institutional potential of tokenised financial markets.
Fnality’s founding shareholders are: Banco Santander, BNY Mellon, Barclays, CIBC, Commerzbank, Credit Suisse, ING, KBC Group, Lloyds Banking Group, Mizuho Bank, MUFG Bank, Nasdaq, State Street Corporation, Sumitomo Mitsui Banking Corporation, and UBS.
"We are pleased to be working with Fnality and our clients in shaping a cutting-edge solution on wholesale digital cash and digital securities settlement for the benefit of the whole industry."
Lieve Mostrey, Chief Executive Officer, Euroclear group
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