Blockchain for capital markets: EquiChain unveils working prototype

Rage Review : London-based fintech startup EquiChain has developed a working prototype of a blockchain solution for the capital market that can improve market efficiency and lower entry barriers to emerging and frontier markets, starting with the Middle East market. The company has completed its first round of financing and will be committed to building a global capital market infrastructure platform.

Translation: Annie_Xu

EquiChain, a London-based fintech startup, has launched a working prototype of a blockchain solution for capital markets that could help improve market efficiency and help global investors access emerging and frontier markets. The company plans to implement a full end-to-end “execution-to-custody” pilot in 2017.

Founded in 2015 by CEO Nicholas Bone, a former banker at the Bank of England, Deutsche Bank, BNY Mellon and Standard Chartered PLC, EquiChain is building a global capital markets infrastructure platform.

By leveraging blockchain technology, EquiChain's patent-pending solution enables direct interaction and value exchange between existing market participants without the multiple touchpoints and inefficient interactions of different systems that are currently required. It also creates a verifiable, transparent and immutable information flow, making market processes smoother.

Nicholas Bone

Bone said in a statement:

“The current securities trading lifecycle is complex, expensive, time-consuming and fraught with risk. EquiChain will redefine the securities trading process using distributed ledger technology (DLT), creating a complete “execution-to-custody” capability. EquiChain’s core platform is an independent, flexible foundational technology that allows existing market participants to redefine their roles in the industry. It will foster industry collaboration to define new capital market operating models.”

According to a study by Oliver Wyman, bank IT investment and capital market operating expenses reach $100 billion to $150 billion per year, and another $100 billion is spent on post-trade and securities service fees. Blockchain technology can reduce the cost of providing securities services by more than 30%.

Focus on emerging markets

EquiChain, which is backed by Abu Dhabi Global Market, Bahrain Bourse and Qatar Stock Exchange, will focus on boosting investment in emerging and frontier markets, starting in the Middle East.

Bone said:

“Blockchain technology is particularly important for emerging and frontier markets, which are often viewed as riskier by foreign investors and where existing infrastructure is less cumbersome. Blockchain technology can provide these markets with the opportunity to leapfrog existing solutions.”

Markus Ruetimann, senior advisor to the Equuschain board and former group chief operating officer of Schroders, a UK-based asset manager, noted that entering frontier and emerging markets presents many operational challenges. EquiChain’s solution will make these markets open to investors while strengthening local infrastructure.

In addition to Ruetimann, the EquiChain advisory board includes former Standard Chartered bankers Peter Sands and Sonia Rossetti, and Eva Micheler, associate professor of law at the London School of Economics.

The technology could disrupt entire markets, and perhaps sooner than many people think. Last year, Deutsche Bank conducted a survey and found that three-quarters of 200 financial market participants believed that blockchain technology would be widely used in the next three to six years. More than 80% of respondents expected distributed ledgers and blockchain technology to have a significant impact on the securities services market.

EquiChain also announced the closing of its first funding round, with a company spokesperson declining to disclose details of the transaction.