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Industry roundup: 21 January

World’s first CBDC fund transaction on live market infrastructure completed

Banque de France (BDF) has successfully completed a central bank digital currency (CBDC) transaction, using the SETL blockchain that powers the IZNES fund platform. 

The CBDC tokens were used to subscribe to a fund on the platform and represented the world’s first successful live settlement of a fund using CBDC tokens. The experiment was carried out on the IZNES platform in collaboration with Citi, CACEIS - the custody bank of Groupe Credit Agricole, Groupama Asset Management, OFI Asset Management, and DXC Technology.

As part of this experiment, shares of the money market fund ‘Groupama Enterprises’ were subscribed and then redeemed on the IZNES Platform using Central Bank Digital Currency tokens created by Banque de France. The global amount of the transactions exceeded €2m.

SETL provided both the distributed ledger technology (DLT) as well as the infrastructure underpinning the issuance and redemption of the CBDC tokens, in collaboration with the BDF and IZNES technology teams.  

Citi and CACEIS acted as the participating commercial banks to purchase CDBC tokens from Banque de France. CACEIS also acted as the custodian of the Groupama funds.

As reflected in the Banque De France’s own statement, this experiment represents a significant step forward in assessing the contribution that CBDCs can make in the real economy.  The successful fund experiment tests the levers that a central bank digital currency provides for enhancing the efficiency and resilience of the settlement of financial assets in a blockchain environment.


Finleap Connect partners with SIA on open banking services in Europe

Finleap Connect, the full-stack open banking platform of European fintech ecosystem finleap, has signed a strategic partnership agreement with SIA, a European hi-tech company in the payment services and infrastructures sector, controlled by CDP Equity, to deliver new open banking services to European banks, financial institutions and fintechs. 

It will allow Finleap Connect and SIA to integrate their respective PSD2 compliant solutions enabling the adoption at international level of innovative use cases based on accounting information services (AIS) and payment initiation services (PIS) and boosting the growth of new digital payments applications to be provided through different channels. 

The partnership between the two companies marks another step towards a European customers’ value proposition through combined payment options and transactional flows: this is made possible by leveraging on advanced API interfaces that allow third parties to access straight to the customer’s bank accounts, respecting PSD2 regulations and thereby providing different use cases. 

Specifically, the AIS allow corporates, financial institutions, and fintechs to access the bank account of the customer, providing a detailed overview of the user’s finances and pursuing the creation of use cases aimed at enhancing the market value proposition. Likewise, the PIS enable them to take advantage of new payment systems underpinned by digital channels reshaping a user experience that is more enriched and customised. Indeed the user will be able to make any payment simply, safely and in real time. 


Banks and the Swedish Police Authority formalise AML-cooperation

In June last year, the five largest banks in Sweden, started a collaboration with the Police Authority aiming at improving the ability to identify and combat money laundering and organized crime by an increased information sharing. The pilot phase of the initiative has had promising results and the banks, and the Police have now decided to take the co-operation to the next level by formalising it to a greater extent.

The SAMLIT-initiative pilot (Swedish Anti Money Laundering Intelligence Task Force) was launched in June last year. During the summer and autumn, the participating banks - Danske Bank, Handelsbanken, Nordea, SEB and Swedbank – have jointly and regularly met with the Police Intelligence Unit at the National Operations Department (Noa) to share information. The Swedish Bankers' Association also participates in the initiative.

The purpose has been to find ways to increase the co-operation between the banks and the Police to improve the ability to identify and prevent money laundering as well as to fight organized crime and terrorist financing. The initiative has, for example, enabled an increased exchange of information regarding new approaches, types of crimes and other patterns that have been jointly identified.

“Money is often the driving force behind organised crime and criminals occupy themselves with money laundering to cover for criminal proceeds," commented Linda H Staaf, head of the Swedish Police Authority’s Intelligence Unit at the National Operations Department (Noa). "The co-operation between the banks and the Police Authority has provided us with more information which increases our ability to prevent serious crimes such as shootings and explosions. The information enables us to interrupt and to aggravate individuals who are guilty of serious criminal activities.”

The banks and the Police Authority have now decided to take the co-operation to the next level by formalising it to a greater degree. SAMLIT will transition itself from a pilot project to becoming a regular collaboration. The ambition is to develop a more formal framework for co-operation and governance in the coming months. SAMLIT will also promote legislative and regulative changes to improve the possibility of information sharing and will strive towards an increased number of participating banks to increase the efficiency of the co-operation.


Cobalt and Baton Systems partner to streamline post-trade FX processing

Cobalt, a foreign exchange (FX) and digital asset infrastructure provider announced that it has entered a partnership with Baton Systems, a provider of post-trade solutions for capital markets. Under the agreement Baton’s payments infrastructure will be combined with Cobalt’s middle office platform to provide an end-to-end FX settlement solution.

Foreign exchange market infrastructure is widely recognised as being in need of modernisation. Over the past few years, Baton and Cobalt have been promoting the shift to automated solutions to mitigate risk and improve efficiency, boasting some of the largest financial institutions as their clients and backers.

“The FX industry is rife with opportunities for modernisation, but legacy systems lag behind much of the financial services industry in terms of innovation," said Darren Coote, CEO of Cobalt. "By combining our middle office platform with Baton’s payments infrastructure, we are delivering a more efficient settlement system that is not marred by high cost, antiquated technology and other restrictions.”

“In 2020, the increased market volatility exposed the underlying issues with liquidity, operational infrastructure and settlement that have hindered the industry for decades," said Arjun Jayaram, CEO of Baton Systems. "By integrating our real-time PvP FX settlement process with Cobalt we can deliver improved visibility and control over the settlement process to a new segment of the market, eliminating many of the systemic risks currently plaguing the industry.”

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