By
Steve Muchoki
November 30th, 2023
Euroclear and Paxos are preparing for the launch of the Bankchain service that is expected to deliver lower costs and lower risk for the London gold market.
Euroclear, a trusted provider of post-trade services, and Paxos, a financial technology company delivering pioneering blockchain solutions, have successfully completed the second pilot for Euroclear Bankchain. This blockchain settlement service is scheduled for official launch later this year.
The pilot lasted two days and included Citi, Société Générale, MKS PAMP Group, INTL FCStone Ltd, Barrick Gold Corporation, NEX EBS BrokerTec and ED&F Man. Totally, more than 100,000 settlements were processed.
“It has been exciting to watch the growth of the Euroclear Bankchain pilot program over the last month,” says Seth Phillips, Bankchain Product Director at Paxos. “We doubled the number of firms and significantly increased interaction as participants were spread across six countries and four time zones. Most importantly, we’re proving that the platform can deliver lower costs and lower risk for the London gold market.”
The first pilot program saw over 600 OTC test bullion trades settled on the Euroclear Bankchain platform within two weeks. It took place in December 2016.
The test run included such prominent market participants of the London bullion market as Scotiabank, Société Générale, Citi, MKS PAMP Group and INTL FCStone. All the companies form the Euroclear Bankchain Market Advisory Group that totally unites 17 participants partnering Euroclear and Paxos in the roll-out of the new service. The Group was launched in June this year.
“We are encouraged by the extensive engagement of market participants in this second pilot and will continue as we further develop this new market infrastructure for the bullion market. The feedback provided is of great importance to make sure that our service will deliver real added value to the London bullion market through transparency, capital reduction and delivery versus payment settlement”, Angus Scott, Head of Product Strategy and Innovation at Euroclear, said.
Euroclear and Paxos are cooperating to launch the Euroclear Bankchain service. Now, they are working with the London bullion market executing successful pilots to test and obtain feedback on the service. Scott said: “This is a real first step in bringing a new settlement capability to the London bullion market that will help lower risk and simplify the post-trade process.”
Euroclear and Paxos expect Bankchain platform to bring instant settlement and simultaneous delivery versus payment to the London bullion market, thus reducing risk and capital charges incurred under the current process. Initially, Bankchain used to be recognized under the itBit umbrella, but later became established as an offering under the Paxos brand.