ABN Amro joins Paxos blockchain settlement service for US equities

European bank becomes the sixth broker-dealer to join the service, which already includes Bank of America, Credit Suisse, Instinet, Societe Generale and Wedbush.

By Wesley Bray

ABN Amro Clearing Chicago has joined the Paxos Settlement Service which uses blockchain to settle listed US equity trades, making it the sixth broker-dealer client to join the service.

Paxos Settlement Service is a private, permissioned blockchain solution designed to allow two parties to bilaterally settle securities trades directly with each other.

The blockchain pioneer is operating a pilot phase of the service under No-Action relief from the US Securities and Exchange Commission (SEC). Since initiating the service in February 2020, Paxos has continuously settled trades on a daily basis.

ABN Amro joins the service which includes Bank of America, Credit Suisse, Instinet, Societe Generale and Wedbush as other members.

As new broker-dealers join the service, Paxos said the network’s benefits increase, “delivering improved savings and efficiencies to its participants”.

“Paxos has demonstrated an ability to innovate and deliver compelling enterprise-grade solutions in a complex and high-value market,” said Greg Lee, managing director of Paxos.

“By working closely with our industry clients, we’ve been able to streamline back-office processes, offer scalable same-day net settlement and enable opportunities for business development.” 

Paxos is currently applying for full clearing agency registration with the SEC. If granted, the Paxos Settlement Service intends to provide greater flexibility to the industry around their settlement cycles, ranging from T+2 to T+0.

In addition, Paxos will run real-time multilateral netting processes to ensure more efficient net settlement of transactions.

Shorter settlement times in US equities represent one of the biggest talking points in the securities services space at present. Earlier this year the DTCC informed regulators that there are no hurdles standing in the way of reducing the cycle from T+2 to T+1.

In addition, the DTCC announced last week that Project Ion, its alternative settlement platform that leverages distributed ledger technology (DLT), is set for launch next year after demonstrating the viability of supporting both T+1 and T+0 cycles.