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AccessFintech is a global data management and custody company that is transforming post-trade operations though its Synergy Network, which allows clients to collaborate across and within organisations, reducing human error and email traffic, improving efficiency and risk management, and helping firms comply with regulatory requirements such as CSDR and the impending move to T+1 settlement.

Notable partners and collaborators: BNY Mellon, Citi, JP Morgan, Bank of America, Goldman Sachs, SIX, Broadridge, Symphony, Deutsche Bank, Credit Suisse

As a sign of the fast-paced fintech world we now live in, while writing this very article, we received news that AccessFintech had successfully raised $60 million in a Series C funding round which saw a first-time investment from BNY Mellon along with further backing from JP Morgan and Citi. The investment brought the total capital raised by the business to $97 million since 2018. Add to this the fact that the fintech now counts over 100 clients, and it’s clear to see why the industry is so excited.

AccessFintech allows clients to improve their operations across settlement and other post-trade workflows. Reducing failed trades, as well as the resources needed to manage settlement overall, directly increases revenues and impacts the bottom line. It’s Synergy Network and tools – from best practice data normalisation, seamless handling of penalty data, strong communication protocols, and automated workflow handoffs together create a single, consistent version of truth for all participants in the settlement workflow.

The fintech has plenty of statistics to quantify its progress to-date. One firm reported it went from being able to validate 10 penalties a day to 1,000. Another tier one bank said it was able to shorten its penalty reconciliation times from several days on average to 30 minutes.

“These results resonate across AccessFintech’s entire network,” the firm said. “Moreover, Synergy is a third-party, cloud-based solution, meaning participants can feel this impact without needing to spend the resources to build data normalisation and workflow capabilities themselves. All they need to do is upload onto the cloud.”

The number of milestones and partnerships AccessFintech has announced over recent years occasionally makes you forget the company is only eight years old, and its place in the securities services industry is now so cemented that it almost feels like an incumbent. Backed with significant investment and expectations, the future is incredibly bright for the business. “AccessFintech will be the de facto collaboration software for the securities services industry and will serve as critical support, particularly during times of stress,” the firm tells Global Custodian.

It uses the uncertainty surrounding CSDR in Europe as an example of its work within the industry. “AccessFintech saw within weeks of go-live that the biggest challenges for organisations implementing the penalties regime were related to data issues arising from the CSDs. To address this problem, we decided to open our CSDR penalty eligibility determination and rate card to the market, not just existing clients, offering to support them for free through the first months of change.

“Dozens of organisations accepted the offer; the company has onboarded 80+ data publishers comprising tier one banks, custodians and asset managers. The impact of AccessFintech’s work was felt industry wide as the company stepped in to bring order to chaos. This description reflects why the company is valued by its clients and why it will be a part of securities services in the years to come.”

Arcesium designs advanced data, operations, and analytics capabilities for the financial services industry. Our consultative approach, cloud-native technology, and deep domain expertise help our clients achieve transformational business outcomes.

Notable partners and collaborators: JP Morgan, State Street

Arcesium was spun out of DE Shaw Group, a global investment manager with around $25.8 billion in hedge fund assets in 2015 and provides treasury, data management, portfolio accounting and other services to hedge funds.

The fintech first appeared on Global Custodian’s radar when it struck a deal with JP Morgan in 2017 to provide middle- and back-office software to support the bank’s administration platform. This deal would go on to evolve in the years to come as the two firms then extended their partnership in October 2018, when Arcesium created a bespoke offering for fund managers on JP Morgan’s platform. Those advances allowed end-users to have their own technology, data model and integration to inbound and outbound systems, while connecting to their administrator for NAV calculation and all investor-related services and communications. After years of working together, the bank then took a stake in Arcesium in January 2020.

Since then, the mandates and expansions have kept coming. Notable deals have seen Arcesium’s tech adopted by the likes of Hill Country Asset Management, Broad Reach Investment Management and Fir Tree Partners. The tech provider has also opened offices in London, Bangalore and Delhi NCR.

Working with its partners, Arcesium has been refining its products and launching new offerings. In June last year, the group launched a new performance allocations tool designed to streamline and reduce fund accounting risks. The new PerformA tool aims to simplify the investor accounting process and reduce the risks, costs and manual errors associated with typical spreadsheet-based fund accounting.

PerformA moved Arcesium solidly into the private equity space, expanding from its typical focus on hedge funds and fund administrators, though the solution is tailored for various client types.

One of its more recent deals was with State Street Fund Connect, a global trading and analytics platform, whereby Arcesium and Fund Connect will introduce new capabilities to provide mutual clients with a consolidated view of their cash portfolios and a single point of access to multiple markets and fund providers.

With the support of Arcesium’s Treasury Suite, the integration is designed to streamline workflows for the companies’ mutual clients. As a result, users can manage cash and payments within one ecosystem, interact with global digital liquidity networks for short-term investments, and reduce operational overhead.

Copper is an infrastructure provider in the digital asset space that ensures the security and trading needs of institutional investors by providing safeguards against counterparty risk, theft, fraud and misappropriation of assets.

Notable partners and collaborators: State Street, FTX, Hehmeyer

Founded in 2018, Copper has amassed a client roster of 500 in a short space of time, comprising trading firms, financial institutions and corporations which use its custody, trading, prime brokerage and staking solutions to manage their assets. As impressive as its business has been, the other side of the story is the talent it has attracted to its ranks. A big splash in the hiring of former Citi, Deutsche Bank, Goldman Sachs and JP Morgan executive Sabrina Wilson was followed up by lifting a team from BAML to expand its prime infrastructure. Meanwhile, it’s latest addition – chief risk officer Tim Neill – hailed from the London Stock Exchange Group, Standard Chartered Bank and Deutsche Bank. In a short lifespan, it’s clear Copper is building something special in the digital asset space.

“It is our goal and expectation that the rails we are creating for the digital asset world will, at some point, be able to be adopted by the wider financial services industry through the tokenisation of securities and the broad adoption of central bank digital currencies globally. Providing secure and efficient trading solutions of digital assets is just the start.” Secure custody of digital assets remains an ongoing concern for any crypto investor, given that best practices and technology in risk and technology continue to evolve. A report by ImmuneFi found that losses resulting from hacks, scams and other malicious activities in crypto markets during 2021 exceeded $10.2 billion. Much of this was due to private key theft and compromised credentials.

Since 2020, Copper custody has been powered by a new decentralised solution called multi-party computation, or MPC. This novel solution removes the critical attack vector of private keys because no one private key exists. Instead, key shards are created separately and in isolation. MPC custody remains the most robust solution in the market and we’re now seeing more third-party custody providers embracing this technology.

As Copper correctly highlights, there is no shortage of opportunity in digital assets, but there’s plenty of risk to go around as well. At the forefront of investors’ minds when trading crypto-assets is counterparty risk of crypto exchanges. This is because all exchanges have the potential to fall prey to hack/thefts and lose customers’ digital assets. Copper’s ClearLoop solution enables clients to trade digital assets without moving assets to exchanges, diminishing the risk that funds will be hacked, frozen or misappropriated.

In March this year, State Street’s dedicated digital division entered into a licensing agreement with Copper.co to develop and launch a digital custody offering. The global custodian is utilising Copper.co’s technology to build a platform where clients can store and settle their digital assets within a secure environment managed by State Street.

“That State Street, one of the world’s largest custodians, is creating a new digital asset service is a hugely important development for institutional engagement in this new asset class,” said Wilson at the time. “We are proud to be part of State Street’s goal to lead the way in the transformation of financial infrastructure.”

The deal was a major one for Copper and cemented its place in this list and among the most talked about digital asset firms in the market.

“The existing players in securities services would like services of the same standard to be available for digital assets as for other assets. Further regulation is of course a requirement in order for the sector to progress, but, in the meantime, Copper is doing its best to provide trading solutions which meet and exceed the expectations of institutional investors so that digital assets can be a normal part of this ecosystem alongside other asset classes,” Copper told Global Custodian.

Fireblocks is a digital asset custody, transfer and settlement platform. MPC-CMP wallet technology. 24/7 access.

Notable partners and collaborators: BNY Mellon, BNP Paribas, Six Digital Exchange, ANZ Bank, FIS, Zodia

In an initiative filled with fairy tale-like accomplishments, Fireblocks may be the Cinderella story among them. While we haven’t looked to dwell on the size of investments or valuations in this Global Custodian project, Fireblocks – founded in June 2018, is now valued at $8 billion. Let that sink in for a moment.

In addition, it was recently revealed Fireblocks’ 2022 Annual Recurring Revenue (ARR) has surpassed $100 million, just four years after the company’s inception, as it joined a rare subset of start-up unicorns with 9-figure recurring revenues.

So what’s the hype about? Fireblocks is an enterprise-grade platform delivering a secure infrastructure for moving, storing, and issuing digital assets. Fireblocks enables exchanges, lending desks, custodians, banks, trading desks, and hedge funds to securely scale digital asset operations through the Fireblocks Network and MPC-based Wallet Infrastructure.

Just four years into its existence, Fireblocks serves over 1,500 financial institutions, has secured the transfer of over $3 trillion in digital assets, and has a unique insurance policy that covers assets in storage & transit.

“Some of the biggest trading desks have switched to Fireblocks because it’s the only solution that CISOs and Ops Teams both love,” the firm states.

As an early investor in Fireblocks, BNY Mellon executives we’ve spoken to seem bowled over by its growth, accomplishments and capabilities.

“Developing products to bridge digital and traditional assets is foundational to the future of custody,” said Roman Regelman, CEO of asset servicing and head of digital, BNY Mellon in 2021, when the custodian invested. “Following significant due diligence and market research, we recognise Fireblocks as a market leader in providing secure technology to support digital asset services.”

Since then, BNP Paribas Securities Services and Standard Chartered’s Zodia have worked with Fireblocks on their digital asset ventures. The former will initially use Fireblocks’ solution on its ongoing experimentation with the settlement and custody of regulated security tokens, and use the firm for its hot wallet, tokenisation and connectively infrastructure layer. For Zodia, its clients will be able to directly connect to the Fireblocks network of more than 1,000 liquidity partners, trading venues, lending desks and counterparties. Access to the platform will enable instant transfers, rebalancing and payments directly from their Zodia Custody wallet.

Upon closing its Series E funding, Fireblocks stated: “We’ve now raised $1 billion in total, and our funding will be instrumental in empowering organisations around the world to thrive in the digital asset economy. To achieve that, we’ll continue to build self-service functionality, enable our customers to deploy the most innovative products, and invest in people who can help our clients on a global scale.”

Fireblocks is an organisation where the numbers speak for themselves, and with the investment it has, it is intriguing to consider where Fireblocks could be in another four years.

FundGuard revolutionises investment funds technology with a next generation AI-powered platform.

Notable partners and collaborators: Citi, State Street

From Global Custodian, November 2019: “A fintech firm using artificial intelligence (AI) is launching a new platform allowing asset managers, custodians and fund administrators to accelerate their ultimate goal of digitisation.”

From Global Custodian, April 2022: “Citi and State Street have joined initial investors Blumberg Capital, LionBird Ventures, Team8 Capital, bringing total investment in FundGuard to more than $55 million in three and a half years.”

A start-up that resonated with the securities services industry almost immediately, the funding round announced earlier this year followed a successful 12 months for FundGuard, landing asset manager, fund administration and custody bank customers; launching its enhanced investment accounting solution, including support for digital assets; and announcing the appointment of John Lehner, former State Street and BNY Mellon executive as president.

Speaking to Global Custodian, Lehner said the funding round will help FundGuard to bring on additional resources and achieve scale. “We’re bringing on resources across the spectrum for both development and capacity. We’re working with more clients to bring them live onto the platform, providing support and services to them.

“We’re also expanding the development team, to continue to identify new areas for us to expand the platform. One of the benefits of being a cloud-native platform is the speed at which we can move, and the ability to open it up for third party development.”

FundGuard is an AI-powered SaaS platform for investment management and administration, helping asset managers and fund administrators to manage mutual funds, ETFs, hedge funds, insurance products and pension funds.

Its cloud-native, AI-powered operating system and technology platform is transforming investment operations and existentially changing asset servicing to enable reduced fees and the ability to offer new and innovative products – including digital asset services and support for sustainable investing – at scale.

Looking to the future, Lehner told Global Custodian earlier this year, that among other areas, the company is exploring two main sectors for development – accommodating new asset types, particularly crypto assets onto the platform and processing those; and a contingency/oversight tool for clients’ providers and systems.

“Given that some of these legacy platforms now have more frequently occurring outages for our clients in fiduciary, oversight or depository roles, they really are eager to have in place a contingency and oversight capability – which is something we’re now working with a number of clients on.

“There are other areas that we’re working on, but these two are the ones we hear most frequently from our clients.”

Reconnecting investors and asset managers by helping intermediaries to digitise fund distribution operations through a market infrastructure based on distributed technologies.

Notable partners and collaborators: Clearstream, BNP Paribas Securities Services

While many blockchain start-ups fell down in recent years by operating as a ‘solution looking for a problem’, FundsDLT has succeeded in operating in the complete opposite way.

A decentralised technology platform for the distribution of funds, the FundsDLT project was initiated in 2016 and is owned by Clearstream, Credit Suisse Asset Management, the Luxembourg Stock Exchange and Natixis Investment Managers. The blockchain outfit has intelligently targeted fund distribution, an area ripe for innovation and new technologies, and is planning to reduce administrative tasks, manual processes and the time to process transactions.

In a bid to benefit asset managers, distributors and asset servicers FundsDLT is looking to reduce costs by removing redundant activities while providing the opportunity to achieve necessary transparency on end investors and create the foundation for digital fund distribution, enabling asset managers to sell funds through a new distribution channel, while significantly reducing administration costs and the time to process transactions.

The firm is using blockchain, cloud and APIs to achieve its goals and has conducted a number of tests and transactions as it looks to reduce transaction processing time down from several hours to a few minutes.

In 2021, UBS Asset management successfully concluded a proof-of-concept pilot that aimed to explore a front-to-back blockchain-based investment fund distribution model. The pilot covered and simulated the entire distribution process, starting with investor onboarding, transaction initiation up to settlement and transfer agency. On FundDLT’s blockchain-based platform, all parties involved had real-time transparency on the straight-through transaction including real-time reporting and status updates. As a result, the pilot confirmed the viability of a blockchain-based distribution model and, in general, the advantages of digital distribution of investment funds.

Elsewhere, companies including Zürcher Kantonalbank (ZKB), BNP Paribas Asset Management and Credit Suisse Fund Services have used FundsDLT for end-to-end fund transactions.

While the past 12 months have been quieter from an announcement perspective than some of the other fintechs in this list, as the industry embraces the concept of tokenisation of investment funds and the search for efficiencies and cost savings becomes ever more pressing, FundsDLT could play a major role in the transfer agency and fund distribution models of the future.

Our mission is to improve collateral mobility amongst market-leading tri-party agents and custodians, which serves to achieve capital cost savings for our clients.

Notable partners and collaborators: BNY Mellon, Goldman Sachs, JP Morgan, Citi, ING, Deutsche Boerse, R3, BNP Paribas Securities Services

The HQLAx story is enough to light the entrepreneurial fires in even the most long-serving company lifers. After spending 18 years working in securities lending and financing positions at UBS, Guido Stroemer added his name to history’s list of opportunistic entrepreneurs with a new initiative aimed at revolutionising collateral mobilisation.

Aptly-named HQLAx, the project was one he could not have undertaken if not for his years of experience in the securities finance business. Essentially the idea is to create digital collateral records which represent an ownership stake in baskets of securities which are easily transferable between custody accounts without the physical movements of assets.

The concept has taken off to the point where HQLAx has become one of the first names that comes to mind when many securities services executives are asked to highlight innovation in the industry. And in a relatively short period of time, you just have to look at the client list and investors (BNY Mellon, Goldman Sachs, JP Morgan, Citi… to name a few) to see how HQLAx has resonated with the industry.

“Collateral management is slow and clunky, delays in operational processes and settlement fails have resulted in operating, regulatory and opportunity costs for firms,” the company explains. “HQLAx was created to solve some of the biggest pain points in securities lending including intraday liquidity requirements, intraday credit exposures, and interoperability between tri-party agents.”

Conventional market practice has been to settle collateral upgrade transactions by either Two Free of Payment deliveries or Two Delivery versus Payment settlements. Both settlement practices consume costly bank capital. The former creates intraday credit exposures due to mismatches of unsynchronised (FoP) deliveries, and the latter consumes intraday liquidity due to the cash payment legs of (DvP) settlements.

Banks are forced to maintain buffers of liquidity and collateral to manage these exposures caused by unspecified and imprecise settlement windows. The evolving focus on intraday liquidity and credit management has naturally created an opportunity in the market for an operating model that helps improve collateral mobility, streamline operational processes, and reduce settlement fails. This is where HQLAx comes into play, as it harnesses the unique capabilities of the blockchain ledger to eliminate many of the inefficiencies associated with traditional collateral management.

Not only could you fill this page with current achievements, but the pipeline is equally as long. Backed by two rounds of investment, the fintech says it has multiple use-cases in its product pipeline including VM, triparty Access and DvP.

“As a result of the market volatility of the pandemic we received significant interest from clients and potential future clients for a use case that manages margin exposures, we intend to introduce this to our product offering in the coming months.

“In H1 2023 we plan to roll out triparty Access, which will enable clients to off-ramp securities from the HQLAx ledger to all the major Triparty Agents in Europe. Our current operating model caters for non-cash ownership transfers, however we have plans to expand our product suite to include DvP in the future.”

The securities lending landscape is evolving, and HQLAx says it is seeing monumental shifts from the traditional way of collateral management to new ecosystems created with new technology.

Kingfield is building a next generation ecosystem that provides a common operational support infrastructure for the global financial marketplace.

Notable partners and collaborators: BNY Mellon, DTCC, Broadridge, Pirum

In a pitch that delivers music to the ears of securities services providers, Kingfield is looking to tackle the perennial problems in the post-trade industry of manual and outdated processes.

Through a standardised ecosystem – that Kingfield says brings back-office operations, namely exception resolution, into the 21st century – the outfit is looking to help an industry that has devoted significant time, energy, and resources to digitising its processes for trading, clearing and settlement.

“Most firms recognise that industry participants would benefit significantly from common technology solutions that are utilised for tasks deemed non-competitive or costly to support,” Kingfield says to Global Custodian. “By focusing on one problem at a time and collaborating closely with our clients, we’re stringing together humble wins to build momentum and a better, more efficient, digital back-office. With an experienced and seasoned senior management team, Kingfield is delivering a new environment that vastly improves on the existing processes currently in place.”

Kingfield has developed a shared common case management application for Income Claims and is in the development stage for a similar technology system for Tax Withholding Recovery (including Relief at Source/Tax Voucher) processes.

Both solutions have been designed to standardise operational messaging and workflow across institutional clients, counterparties, and their respective agent banks. Market participants engage each other through an operating model that provides a shared transaction record across a dedicated and secure network environment.

Using constructive feedback from a working group consisting of the largest global and sub custody banks, prime brokers and many of the largest global investment management firms, Kingfield has created an operational platform that is tailored to the needs of the financial industry. Kingfield will continue to work with its securities services customers to develop common technology solutions that address back-office challenges holistically for the industry.

Some of its partnerships to this point have been particularly notable for the securities services industry. Following a partnership with BNY Mellon in 2019 which leveraged machine learning and AI for greater operational efficiency, Kingfield partnered with Broadridge in creating an integrated solution with its asset servicing platforms and Pirum’s CoacsConnect service to automate the full lifecycle of income claims for financial institutions.

In July this year, Kingfield then partnered with DTCC for what many call the “last mile” of Income Claim processing and settlement.

The partnership was endorsed by David Kabilian, managing director at State Street Corporation, at the time. “Being able to access ClaimConnect’s near real-time claim validation and matching through the Kingfield platform has been a game-changer for us,” he said. “This solution has helped us unlock firm-wide benefits, including significantly reduced risk and increased efficiency.”

Lukka believes digital assets and blockchain will be the fabric of global commerce. We are building data and software solutions in preparation for this future.

Notable partners and collaborators: State Street

The traditional technology you are using is not built for crypto assets,” is Lukka’s message to fund administrators. As one of the early crypto firms to set up with a view to support traditional funds and administrators, Lukka has been partnering, adding experienced team members and emerging as a thought leader in this space for some years now. The efforts culminated in a Series E funding round this year which valued the company at more than $1.3 billion.

Founded in 2014, Lukka serves the largest digital asset institutions with middle and back-office software & data solutions. The fintech aims to bridge the gap between the complexities of blockchain data and traditional business needs. Among the achievements over its eight-year span, the organisation is always keen to point out its recognitions that satisfy rigorous technical control standards, such as AICPA SOC 1 Type II and SOC 2 Type II Service Organization Controls, for its data and software products.

In December 2020, State Street led Series C fundraising round into Lukka before then announcing its foray into offering fund administration services to private fund manage clients that are investing in cryptocurrencies and other digital assets through its partnership with Lukka.

The Boston-based custodian is using middle- and back-office technology developed by Lukka to support with the collection, standardisation, enrichment, reconciliation, processing and reporting functions related to crypto and other digital assets. State Street is also using the Lukka Reference Data and Lukka Prime Pricing Data solutions that will enable it to consume crypto assets that are comingled within a private fund manager client’s traditional alternative investment portfolios.

The agreement made public what we at Global Custodian had been hearing about Lukka in the preceding years – that it was set to play a major role in asset servicers launching fund administration offerings for their clients.

As the fund administration world continues to roll out services around digital assets in the future, Lukka’s role could be set to continue to expand. The start-up also boasts a strong roster of experienced securities services professionals including the former head of State Street’s digital partnerships and investments, Kinga Bosse; the former CEO of fund administration firm Intertrust and head of global fund services at JP Morgan, Stephanie Miller, as chief operating officer (COO); and Dan Huscher, the former head of product development for pricing and reference data at IHS Markit. 

In 2019, Global Custodian also handed Lukka an award for Innovation in Digitised Fund Servicing at its Industry Leaders awards.

METACO enables the world’s largest banks to capitalise on the digital asset economy.

Notable partners and collaborators: Citi, BNP Paribas, Societe Generale, BBVA, DBS, Zodia Custody by Standard Chartered

At this moment in time, the institutional world – and subsequently the custody world – are looking at digital assets as an integral asset class of the future. While you can debate the intricacies and barriers, few would deny that cryptocurrencies and tokenised digital assets will play a role in the future of the capital markets. Solving the custody conundrum around these digital assets is part of the key to unlocking this future and will provide the foundation for future growth.

As METACO puts it: “Digital assets are going mainstream, but individuals and institutions are still not equipped to manage this new asset class securely, at scale.”

Subsequently we’ve seen a wave of incumbent custody banks move into the digital asset custody space over the past 12-24 months through dedicated units with senior ranking team members at the helm. For most, rather than go it alone, they have partnered with dedicated crypto fintechs like METACO.

When considering which digital asset custodians to include, it was impossible to overlook METACO. Its bank-grade custody and orchestration platform, Harmonize, enables the safe storage, transfer, settlement and governance of any digital asset. METACO adds that this is underpinned “by the most powerful and versatile policy engine for key management and governance”.

The platform was built in partnership with the largest tier one custodian banks globally, being trusted by leading institutions such as Citi, BNP Paribas, Societe Generale, BBVA, DBS, Zodia Custody by Standard Chartered.
METACO adds that it offers the highest standards of security and compliance required to operate in the regulated digital asset markets.

This summer has been a big one for METACO as it signed a number of agreements with major custodians. In the space of a week in June both Citi and BNP Paribas Securities Services selected METACO to develop their institutional digital asset custody capabilities, marking the first official forays into the digital asset space for the asset servicers.

“Regulated, established banks and financial institutions are moving in, investing in the secure infrastructure required to move this asset class into mainstream usage,” METACO says to Global Custodian. “The problem they must solve is how to manage the trade-offs between security and agility (Lose the key, you lost the asset. Lose the agility, you lost the business model viability). Custody is the foundation to unlock any future market opportunity for. METACO provides orchestration software and infrastructure enabling complex, financial institutions to securely custody, trade, issue and manage digital assets.”

As for what’s next, METACO believes that a material part of capital markets will move on-chain, between $350-$500 trillion of existing and new assets to be tokenised. With the securities services industry set to play a crucial role in helping this market mature, the robust, secure and flexible technology digital asset infrastructure is what’s missing, and METACO is aiming to become the de-facto digital asset core banking system of choice for the industry.

Proxymity connects the world’s ecosystem of issuers, intermediaries, and investors digitally in real time, bringing unprecedented transparency, efficiency, and accuracy to traditional paper based processes.

Notable partners and collaborators: BNP Paribas Securities Services, BNY Mellon, Clearstream, Citi, Deutsche Bank, HSBC, State Street

During a roundtable discussion Global Custodian hosted in 2019, one Citi executive spoke about Proxymity in front of a room of their peers to the response of resounding plaudits and consensus over the potential of the initiative. From that moment on, nothing has come as a surprise in the journey of arguably the most widely praised fintech in the securities services industry.

Launched out of Citi’s innovation lab network and D10XSM programme – an internal strategic growth process that develops and launches new business solutions for Citi – the Proxymity platform enables golden source meeting announcements and agendas to be published directly from issuers to investors who can then send votes in real time to issuers or their agents without the need for manual intervention. They are then able to receive true digital confirmation that their votes have been cast, improving communication and transparency for everyone in the ecosystem.  

The digital-native platform, built on highly scalable technology, provides full compliance with the latest regulations such as the Shareholder Rights Directive (SRD II), while Proxymity highlights how it promotes enhanced environmental, social, and corporate governance (ESG) by improving communication between issuers and investors and making it easier for intermediaries to be efficient, timely and compliant when servicing their clients.

In April this year, Global Custodian wrote that since its launch two years ago, Proxymity had provided digital access to over 22,000 meetings in 27 markets worldwide, with that number likely even higher now.

“We are moving the industry from analogue to digital processes, removing both error and wasted resources, while bringing transparency and accuracy,” Proxymity said to Global Custodian. “True end-to-end digital investor communications will become the standard for the global industry, and we are helping to make that happen.”

The investments, partnerships and onboardings are enough to fill a page on their own here. The more recent include the closing of a $52 million Series B funding round, drawing additional investment from Citi Ventures, Deutsche Börse Group and investor communications provider Mediant. There have been announcements during 2022 with BNP Paribas Securities Services, HSBC, BME, and Computershare, which followed rollouts for Citi, JP Morgan and Deutsche Bank in 2021. As you can see, the industry is partnering with and adopting Proxymity rapidly.

So why Proxymity? Well, despite asset managers not wanting to waste their time worrying about corporate actions and proxy voting, numerous whitepapers and pieces of research in recent years have alerted them to the fact that the inefficiencies in the processes were costing over a billion dollars to the industry per year. A small amount per fund maybe, but a colossal cost as a whole.

For asset managers with numerous intermediaries there have been cases of custodians providing conflicting event data, sometimes in non-STP formats, with the amount that is lost in revenue reflecting the inefficiencies of the entire corporate actions and proxy voting chain.

This is because a lot of the information from a proxy event is not standardised or digitised from the source. Rather, there is a lag when custodians manually input the information into an electronic format and it is then passed on to the next intermediary. This is where the information is most susceptible to deviate and even be delayed for the end investor as this process is repeated.

So a tip of the hat to co-founders Dean Little, and Jonathan Smalley, they created something the industry has truly taken to.

Saphyre’s globally patented, interoperable AI technology digitises, structures, and maintains memory of shared data and documents (as well as permissioned counterparties) in pre-trade. This standardised ‘Golden Source’ of data then automates and expedites downstream trade lifecycle processes.

Notable partners and collaborators: Citi, Standard Chartered, Societe Generale, BNP Paribas, JP Morgan, BNY Mellon

If there was ever going to be a movie made about one of the fintechs we’ve highlighted in this feature – it would be Saphyre. Run by Roche twins Gabino and Stephen, the start-up enabling market participants to assess risk faster and speed the onboarding process by eliminating inefficiencies in the booking, confirmation, and settlement process, has resonated with asset managers, brokers, custodians and administrators alike.

The start-up claims it allows firms not only to assess risk faster and clearly, but also speed up their onboarding processes and eliminate 70-75% of redundant or inefficient post-trade activities. Saphyre digitises all pre-trade data and documents, eliminating redundant manual processes and allowing for secure, expedited access to data throughout the trade lifecycle. The brothers launched the start-up out of New Jersey with a compelling solution, AI technology and an infectious energy that has won over some of the largest institutions in the custody world and beyond.

JP Morgan adopted technology from Saphyre to digitise and automate the onboarding process for its securities services business in 2020, while piloting the solution with BlackRock, where it was able to digitise the custody account opening workflow – a function that has previously been very paper-based and manually driven.

Since then, Saphyre has completed its Series A funding and has been adopted by Societe Generale, Standard Chartered and Citi. BNP Paribas joined JP Morgan in the funding, while other partnerships have come through BNY Mellon, Symphony and – most recently – a buy-side deal with Legal & General Investment Management (LGIM).

The latter is utilising Saphyre’s AI platform for the onboarding and maintenance of its funds. The platform is capable of tracking compliance-related activities, such as NAV terminations, contained within the respective ISDA and GMRA agreements, automating client checks for trading as a by-product of legal agreement setups and amendments. As a result, the platform reduces risk and inefficiencies by removing manual tasks for both buy- and sell-sides.

Some years ago, Global Custodian was treated to a demo and an in-depth behind the scenes look at what Saphyre were trying to achieve and our takeaway was that the Roche brothers were onto something special. It seems the securities services industry and their clients shared the same view.

We saw a clear opportunity to democratise the securities lending market with fintech, so our clients no longer have to walk away from the extra returns lending their securities can offer.

Notable partners and collaborators: Citi

Founded in 2015, Sharegain offers a Securities-Lending-as-a-Service product (SLaaS), which aims to generate additional income for investors on assets that would otherwise sit idle.

According to its website, the start-up began with one question: If every investor has a right to lend their stocks, bonds and ETFs, but only the very largest institutions are able to exercise this right, what would it take to open up this revenue opportunity for every investor?

“The answer was simple,” the firm says. “Build a fintech solution that would enable every asset manager, wealth manager, custodian bank and online brokers to lend their securities and earn a new income stream for them and their clients. The rest is history.”

With SLaaS, Sharegain says it has brought the 60-year-old practice of securities lending into the digital age. The product is an automated platform that enables private banks, asset managers and online brokers to lend their stocks, bonds and ETFs and generate additional revenue for them and their clients.

With an API, the solution can be integrated directly into these organisations’ own platforms. Sharegain can also provide digital agent lending capabilities to enable more organisations, such as smaller custodians and private banks, to manage their own securities lending programmes.

Citi, for example, has partnered with Sharegain to offer securities lending to wealth management firms that it custodies. The bank also participated in a $64 million Series B funding round earlier this year.

Expanding securities lending access, including to retail investors, can also have the effect of growing the market as a whole, which could benefit institutional players.

For example, “if you bring up the volume of specials, you’ll see investment banks and hedge funds creating more borrowing strategies,” Boaz Yaari, founder and CEO of Sharegain told Global Custodian last year.

Among some of its product launched over the past 12 months has been the Betterlend program, where investors can allocate and track how some of their securities lending revenue can support social and environmental projects. Environmental, social and governance factors have become more important within the securities lending industry in recent years, but the emphasis has primarily been on areas like aligning lending with proxy voting.

In May this year, Sharegain also became the first company globally to go live with SWIFT public cloud connectivity, enabling full SWIFT messaging capabilities for its clients and their custodians via the cloud.

Symbiont is a technology company focused on solving complex global finance problems using a novel enterprise blockchain solution.

Notable partners and collaborators: State Street, SWIFT, BNY Mellon, Citi, Nadsaq, Vanguard

Sometimes the securities services innovation scene can seem like a bit of a ‘what have you done for me lately?’ business, whereby relative inactivity can be mistaken for a lack of progress. For Symbiont, nine years of vision, build and patiently wading through the complexities of capital markets innovation have resulted in a wave of partnerships and milestones of late.

This began with a landmark collaboration with State Street and the custodian’s cherished asset management client, Vanguard, whereby they completed the margin calculation process for a live trade of a 30-day foreign exchange forward contract through the use of distributed ledger technology (DLT).

The live trade for foreign exchange forward contracts leveraged blockchain technology and smart contracts in December 2021 in what State Street called a “monumental industry initiative” to digitise the margining process around collateralised foreign exchange forward contracts that will reduce its customers’ operational challenges.

“This relationship with State Street, it’s the opening of the floodgates,” said Mark Smith, CEO of Symbiont. “It’s the first time a real custodian has put a flag in the ground, saying: ‘we’re doing this to make this world better’ and I hope that’s just the beginning.”

Led by FX specialist and serial entrepreneur Smith, Symbiont was an early pioneer of smart contracts and distributed ledger technologies. It’s Assembly blockchain is an enterprise platform developed to remove operational friction from the lifecycle of financial instruments, while enabling real-time data sharing with optimal security and privacy.

Smith and his team have looked to build an enterprise product that is compliant, can scale and has the proper privacy and confidentiality features. He believed, from the outset, that this was the way the start-up could empower incumbent financial services providers to take advantage of – what in 2013 was seen as a ‘powerful new, early game technology’ – and enable them to transform their business into the digital future.

“What we gravitated towards was the concept that we’re building fintech to solve real problems in existing financial markets and economies,” says Smith. “Crypto was all about creating new economies – each new network is a new economy around that token, with the only reason it exists being to increase the value of the token through the use of the network. That’s a whole different kind of thesis and model than we’re trying to do.”

Symbiont has also worked with Citi, BNY Mellon and Nasdaq, and more recently SWIFT, whereby the cooperative worked with seven securities players as part of a new pilot project to further automate and increase the accuracy of the corporate action workflow by delivering data in near real time. As part of the pilot, Swift is trialling Symbiont’s proprietary technology platform, Assembly, using its smart contracts and blockchain capabilities.

When asked: why do you believe your objective has resonated with the securities services industry? Symbiont stated: “We are increasing efficiencies, lowering costs, broadening transparency and eliminating pain points in previously opaque industries.”

The Taskize mission is to maximise the efficiency of human capital across financial services global operations and transform collaboration and resolution workflows by connecting all operations staff and replacing email, phone and chat with purpose-built intercompany workflows to help anticipate, mitigate and resolve operational activities where STP has failed.

Notable partners and collaborators: Euroclear, Citi

Taskize’s success story can certainly be quantified. Now boasting 500 clients across 85 countries, the fintech says firms joining the Taskize network report up to a 70% reduction in issue resolution times, a 90% reduction in email and a three-fold increase in productivity.

Almost a mature outfit – in comparison to its peers in this list – Taskize was founded in 2012 by Philip Slavin, the current CEO and John O’Hara, the former chief executive. Owned by Euroclear, its journey has been unique, and Taskize has emerged as a poster child of the ICSD’s innovation strategy which involves investment, acquisition and partnerships.

Taskize replaces phone and email within the operational process, improving security, simplifying access, and ensuring clients know the progress and status of their requests.

Coming back to the numbers, Taskize points out that despite decades of investment in STP, operational processes still fail, and new ones are being created to meet market and regulatory demands, with research showing that 60% of operational TCO is made up of human costs.

“In order to meet these challenges and escape from the tyranny of email where transparency and control are arduous overheads, Taskize provides an inter-company workflow platform specifically designed to reduce resolution times, releasing resource capacity and giving management back the oversight, they need to drive their business forward,” the firm explains to Global Custodian.

The concept has certainly resonated and the growth has been accelerated by the wave of new regulations alongside industry initiatives, such as T+1 settlement. The Settlement Discipline Regime of the Central Securities Depository Regulation (CSDR) and the Uncleared Margin Rules (UMR) have also created an increased need for solutions that facilitate faster and more efficient resolution of settlement breaks and margin disputes.

As the owner of Taskize, Euroclear has used the platform as the preferred channel for its members to appeal penalties at both the ICSD and its domestic CSDs. Meanwhile, Citi partnered with the fintech to streamline counterparty operational workflow. The deal enables the bank’s custody clients to leverage Taskize’s query management platform to directly connect to their Citi Operations counterparts.

The firm also tells Global Custodian that its customised workflows are specifically designed to support when firms have outsourced their operations, and this subsequently helped a Tier1 outsource provider win a new mandate. Taskize is also used for internal workflow and scheduled tasks in a top five global asset manager across its global operations to allow it to resolve issues faster and track resource activity to allow improvements in allocation across teams.

As for the future, the industry shift to T+1 across the world and a focus on improving settlement efficiency, leads to a drive for greater efficiency and control through best-of-breed partnering and inter-operability. Taskize says it plans to offer new tailored workflows that help financial institutions resolve post-trade operational problems in the best possible way and prevent exceptions and queries before they occur, using predictive analytics.

Transcend enables capital markets firms to optimise collateral, funding and liquidity through innovative technology.

Notable partners and collaborators: Wells Fargo

Global Custodian interviewed Transcend founder Bimal Kadikar in February this year and discovered the story behind the start-up establish in 2013. He explained how – during his time at Citi where he led an initiative called CLM [collateral, liquidity, and margin] – he came across an opportunity to do something entrepreneurial after spotting gaps in collateral processes and disconnections between teams. This was leaving potential savings on the table.

“As you know, at that time [2008/2009] liquidity was a very, very big deal for many of the large players,” he explained. “The work that we did on that with a relatively small budget and in a relatively short timeframe went all the way to the board. That was surprising, because in big banks, unless you’re spending a billion dollars on technology, the board doesn’t really see these things. Here we were spending less than $2 million and our work was going to the board. I knew then we were onto something and I guess the techie in me always wanted to do something entrepreneurial.

“With Transcend, we always knew we wanted to focus on this space, which was evolving rapidly. It was very confusing, everybody had different ideas about where it was going to go. That’s where I got excited, because it is complex, it’s difficult and it cuts across silos.”

Regulatory and economic factors post-financial crisis have imposed much stricter requirements for clearing as well as collateralising uncleared transactions to de-risk the financial system.

These drivers have resulted in convergence of collateralised businesses such as equity finance, fixed income repos, cleared (CCP) margin, uncleared (UMR) margin, and prime – to name a few – to coordinate with each other to drive efficiencies at the firm level.

While each of these businesses has an operating platform and set of systems, it is difficult for firms to holistically view collateral, liquidity and funding dimensions across all of them. As a result, valuable collateral may be trapped in silos resulting in significant real and opportunity costs for the firm.

Transcend says its own client experiences indicate that there is 10-15 bp of efficiencies that can be unlocked if firms can mobilise these assets for appropriate uses. The fintech looks to helps its clients by providing analytics, optimisation and automation solutions that can be applied at a business level and scaled across the enterprise.

“This space (intersection of margin, collateral, liquidity & funding) is undergoing a series of changes, from greater transparency and wider adoption of optimisation tools to a growing reliance on data and the emergence of ESG,” the firm tells Global Custodian. “Amidst all of these changes, Transcend has positioned itself at the centre, setting the industry-wide standard for optimising inventory, funding and liquidity decisions and delivering unparalleled innovation for both the buy and sell-side.

To accelerate and realise its mission, Transend has grown its team 35% over the past 12 months, including hires with backgrounds at Morgan Stanley, FIS and CME.

There have also been a number of launches such as the industry’s first optimisation solution that holistically and seamlessly integrates ESG criteria into collateral workflows and analytics and Eligibility Central, an end-to-end platform that delivers access to real-time collateral eligibility information and analytics that empowers clients to accelerate critical collateral functionality, such as optimisation and mobilisation.