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Blockchain startup Axoni, in collaboration with 15 leading sell-side and buy-side firms in the equity swaps market, has announced the launch of a distributed ledger network to manage equity swap transactions.
Founded in 2013, Axoni is based in New York and specializes in distributed ledger infrastructure. The company is backed by Goldman Sachs, Andreessen Horowitz, Citi, Franklin Templeton Investments, J.P. Morgan, Wells Fargo, HSBC and others.
The existing process for equity swaps processing is highly inefficient with each counterparty maintaining their own books and records and tracking the changes through the lifecycle of the trade. With active volumes running in millions per firm, which the legacy infrastructure is incapable to handle, there are frequent data breaks between counterparties, leading to significant operational costs from manually reconciling records against one another.
The launch of the distributed ledger network could be said to be the culmination of a multi-year effort led by Axoni. In its press release, the company said that the DLT infrastructure enables both sides of an equity swap to be synchronized throughout their lifecycle, communicating changes to each other in real time.
"Axoni is thrilled to see this network coming alive and being used in production by our partners. The level of collaboration across firms on this initiative to drive feature roadmaps and standards has been impressive, the outcome of which is poised to have a substantial impact on post-trade processing across the industry,” said Carl Forsberg, Head of OTC Markets at Axoni.
At launch, the first live trade data between Citi and Goldman Sachs was processed on the network built on AxCore, Axoni’s distributed ledger software.
“This is a significant milestone which reinforces our commitment to embracing technology to solve real challenges faced by the industry. The platform, using smart contracts, will enable significant efficiencies while mitigating risks in post trade processing of equity swaps,” said Puneet Singhvi, Head of Financial Market Infrastructure and Lead for Blockchain, DLT and Digital Assets at Citi.
In addition, the participating firms also collaborated to create and implement a standardized representation of equity swaps throughout their lifecycle, including initial trade confirmation, cash flows, amendments, and corporate actions.
“We are excited to be working with innovative tech companies like Axoni, and our industry partners, to develop post-trade solutions which automate business processes and synchronize data on common infrastructure,” said Brian Steele Managing Director, Global Head of Market Solutions at Goldman Sachs.
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