Archax, the first FCA regulated digital securities exchange, broker, and custodian, has today announced its subsidiary, Montis Digital, which is building digitally native, blockchain based post-trade infrastructure to allow tokenised assets, such as digital securities or security tokens, to realise their full potential.
Many tokenised assets are regulated instruments and as such fall under securities regulations in their jurisdiction of issuance. Consequently regulation, such as the European Union’s Central Securities Depositories Regulation (CSDR), applies. CSDR mandates that ownership of digital securities be maintained in a Central Securities Depositary (CSD) if the issuance is being admitted to a secondary market for trading – such as Archax. Existing CSDs, however, are not digitally native nor blockchain based, and so the full benefits of tokenisation, such as recording ownership ‘on chain’ or tokens being freely transferable between wallets, cannot currently be fully realised once they are on a secondary market. This is one of many examples of the new post-trade capabilities that are needed to underpin the growing and rapid adoption of regulated digital securities around the world.
Graham Rodford, CEO of the Archax Group, comments: “The potential benefits of using blockchain technology in financial markets are particularly relevant in the post-trade space, where currently there are many intermediaries involved and the whole process can be time consuming and inefficient. Blockchain based post-trade infrastructure can reduce settlement times, remove friction, improve efficiency and lower costs – and our subsidiary Montis Digital is building out the technology that is required for this, and crucially is independent of all the other Archax venues, products and services too.”
Martin Watkins, CEO of Montis Digital, adds: “I’m excited to be part of Montis Digital and the Archax Group, working at the forefront of building the next generation of infrastructure for capital markets using blockchain technology. Having worked with leading Financial Markets Infrastructure (FMI) providers globally and been EMEIA lead for Exchanges and FMI at EY, I am fully aware of the challenges that exist in the post-trade world, and how new distributed ledger technology (DLT) can be leveraged to revolutionise the ecosystem.”
Montis Digital’s DLT post-trade market infrastructure is designed to be blockchain agnostic and will be available to exchanges and market participants globally.