FINTECH-startup Nivaura from the UK, in partnership with cloud service, Microsoft Azure proved that the public register can be used for regulated assets. The company has successfully carried out the registration, clearing and settlement of the transactions with bonds in the Ethereum blockchain.
The author of technology is the CEO and chief architect Nivaura Avtar Sehra (Avtar Sehra), a former physicist who left a career as a scientist, having discovered the shortcomings of the traditional system of investment banking and fascinated by this topic.
FINTECH-startup tested its technology on two investment contracts Principal Protected Notes (PPN) – bonds denominated in GBP linked to the stock index the FTSE 100. In the experiment, the functions of registration, clearing and settlement one contract was carried out in the Ethereum blockchain, whereas in the other case we used traditional methods. The company tracked stock index, the FTSE 100 subsequently comparing the results.
Note that a PPN is an investment instrument with a guaranteed principal amount for the payment of income in the case where an asset is bound to a security increases in price.
“Two securities is equivalent in its economic parameters, was released for retail investors, using technology Nivaura. In the first case, clearing and settlement was carried out centrally on the platform of Clearstream, in other — outdoor public blockchain of Ethereum,” wrote Zehra on Twitter.
In the end, the experiment was successful and proved that the public blockchain can be used for regulated products the financial market.
According to the developers, if the platform will be integrated with investment banks and venture capitalists to gather funds, this can lead to the change of paradigms in the development of investment products, leaving costly third-party providers of services related to clearing, payments and other functions, irrelevant.
Nivaura also cites an example of a retail investment company from the UK, which used a technology based on the blockchain, for the bonding of a year ago. Administrative costs associated with the product, which are usually borne by the Issuer and investors, fell from £30 000 to £50 for the entire life of the financial product.
At the moment Nivaura relies on working with investment banks, but the technology can also be used by any organization-Issuer, including companies or public institutions.
“The industry remains very poorly automated, and hard to create something automated, but flexible. Our system is fully automated, from start to finish. We monitor all data and cash flows in accordance with all requirements, working within the framework of the agreement legal means, listening to all the regulations. It makes sense for issuers and investors,” said Sehra.
As explained by one of Sehri followers on Twitter, the platform creates a link peer-to-peer between the Issuer of the financial product and the investor. The technology is compatible not only with the Ethereum network — it works with the Bitcoin network and may eventually integrate support zcash for and blockchain JPMorgan Quorum.
It should be noted that the company gave preference to Microsoft Azure and its blockchain Protocol, Coco, probably through the provisions of the guidelines issued by the Office of financial regulation and supervision of great Britain (FSA).