June 15, 2020
Vanguard, an American registered investment advisor in partnership with technology provider Symbiont, has announced the completion of the initial phase of a blockchain pilot designed to digitise the issuance of asset-backed securities (ABS).
Vanguard in collaboration with a large US ABS issuer, as well as Citi, BNY Mellon, and State Street, successfully modelled the full lifecycle of an ABS settlement on distributed ledger technology (DLT) network by replicating end-to-end transaction flows.
Both Vanguard and Symbion have been working a large US ABS issuer and participants in the banking industry to improve the process of securitisation of ABS issuances. Pairing Symbiont’s Assembly DLT with smart contracts aims to offer increased information flow, enhanced price discovery and secondary market liquidity, and automate critical corporate actions through the use of a shared infrastructure that is open to all market participants.
“Vanguard is dedicated to providing innovative, world-class solutions that help advance the financial services industry. By digitising and streamlining the ABS issuance process, we will be able to increase the speed and transparency of transactions while reducing costs and minimising exposure to risk, which ultimately leads to a more efficient business model for future generations of capital market activity,” said Warren Pennington, principal and head of Vanguard’s Investment Management FinTech Strategies Group.
Market dynamics, such as periods of sustained volatility and illiquidity has underlined the need for faster, transparent and more automated markets where digital capabilities can help alleviate liquidity and funding concerns. By leveraging Symbiont’s DLT network, Vanguard intends to transform and automate the capital markets infrastructure to deliver better outcomes and reduced costs for market participants. The pilot provides the technical and operational foundation critical to supporting an asset issuance on a distributed ledger network.
“We continue to assess new technologies, collaborating with our clients and partners, with a focus on making the risk transfer process across the industry more robust and efficient,” said Puneet Singhvi, FMI Head and Markets and Securities Services lead for Blockchain, DLT and Digital Assets, Citi.
Since 2017, Vanguard and Symbiont have been working together leveraging blockchain technology to improve capital markets.
“There is considerable significance to the completion of the pilot program. The successful demonstration of an ABS issuance is a momentous step forward in fundamentally changing capital markets infrastructure through blockchain technology. 2020 may be the year that, for the first time, market participants will see a live ledger-based issuance,” said Mark Smith, CEO of Symbiont.
Founded in 2013, Symbiont is the enterprise FinTech company creating the next generation of financial markets infrastructure using blockchain technology. Its smart contracts enable complex instruments to live their entire lifecycle on a truly decentralized, enterprise blockchain network with end-to-end privacy. Recently, the FinTech’s blockchain platform was adopted by GrainChain for global expansion.
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