SIX Securities Services and Digital Asset will work on a prototype for clearing and settling securities trades using distributed ledger technology, the companies said on September 22.
SIX and Digital Asset will also develop a “roadmap” for other processes in market infrastructure that could be simplified and made more efficient by using the technology, the companies said.
Thomas Zeeb, the chief executive of SIX Securities Services, said: “Distributed ledger technology and its potential role in post trading is key to our business. We need to understand it, and more importantly, its applicability and future flexibility in order to keep ahead of the game.”
SIX said it had also carried out separate tests on distributed ledger technologies and will reveal a prototype at the annual Sibos conference in Geneva next week.
Digital Asset CEO Masters said: “Partnering with SIX brings this cutting edge technology another step closer to commercial reality.”
The partnership is the latest between startups developing distributed ledger technology and a large financial institution keen to test whether the software can help with some of the industry’s pain points.
Distributed ledger technology, which was created as the system underpinning cryptocurrency bitcoin, is an immutable and tamper-proof shared ledger of transactions that is maintained by a network of computers on the Internet. Banks, exchanges and other large finance firms hope that it can help lower the costs and complexities of trading and processing securities transactions.
Digital Asset is also testing blockchain technology with other large financial institutions including Australian exchange ASX and JP Morgan. One of the most high-profile startups working on the blockchain, it also backed by Goldman Sachs, CME Group, BNP Paribas, DTCC and other large firms.
Other startups competing for blockchain deals with big firms include UK-based SETL and Rise Financial Technologies and US-based Chain.com, itBit and Axoni.