The Central Securities Depositories (CSDs) Strate, South Africa and NSD, Russia have signed a Letter of Intent at the Sibos event in Geneva in September 2016.
The intention is to forge a partnership between the two CSDs to develop solutions utilizing Distributed Ledger Technology (DLT) with the first use case focused on proxy voting. The parties believe that through industry-wide collaboration, CSDs will be better positioned to face the changes presented by DLT technology and develop innovative solutions for the benefit of the financial market.
DLT, which has emerged as a relatively new and rapidly growing innovative technology, is set to revolutionise the financial markets and fundamentally create a paradigm shift. Given that there is the potential for financial markets to create a distributed ledger that settles securities transactions, financial market infrastructures need to embrace the technology and identify opportunities that will add value to their current clients.
This relationship allows both parties to explore opportunities for mutual cooperation in the post-trade settlement arena including:
- Information sharing regarding standards, regulations and DLT technologies.
- The exploration of solutions that are of mutual benefit to both CSDs; as well as
- Potential cost savings through the sharing of technology and development costs.
A number of other CSDs have expressed interest in joining the partnership and Strate / NSD have welcomed these discussions.
Monica Singer, CEO of Strate, says "It is an important time for CSDs to be working together to define the future landscape in the DLT environment. Strate looks forward to developing this long-standing and valuable relationship with NSD to develop solutions for emerging market CSDs".
Eddie Astanin, chairman of the executive board, NSD comments “We believe that the securities settlement and custody industry is one of the promising sectors where we can use new technologies. I think that post-trading may become the starting point of transition of the distributed ledger technology and blockchain from theory to practice. In 2015, we began research and initiated new developments; since that time we have developed valuable expertise in this sphere, and now we are eager to share it with our colleagues. “
In April 2016, National Settlement Depository was one of the first financial organizations in the world that announced the development of a blockchain-based prototype of e-proxy voting.
Mr. Astanin added that “fast development of technologies and the huge number of startups that enter the market every month is a challenge of our time for major companies. We have to be one step ahead of everyone else and to use the opportunities we have now. Only the united efforts of the largest players in our industry will enable them to respond to new challenges and integrate new technologies.”