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SWIFT unveils collaboration with Citi , Northern Trust on corporate actions blockchain pilot
Interbank cooperative is trialling Symbiont ’ s technology , using its smart contracts and blockchain capabilities to create a network effect that leverages the 11,000 + institutions connected to SWIFT .
SWIFT is working with seven securities players including Citi ,
Northern Trust and Vanguard as part of a new pilot project to further automate and increase the accuracy of the corporate action workflow by delivering in near real time . As part of the pilot , SWIFT is trialling fintech Symbiont ’ s proprietary technology platform , Assembly , using its smart contracts and blockchain capabilities . An area of securities services plagued by manual processes , risk and unnecessary costs , the industry has been eager to collaborate in order to add efficiencies to the process . SWIFT ’ s position in the industry makes it a logical pioneer for a collaborative blockchain solution , and this latest announcement comes just before the arrival of its flagship conference – Sibos – in October , where the theme of blockchain transforming corporate action communications is on the agenda . “ Major asset managers will have hundreds of custodian relationships , with assets and securities scattered across a wide range of counterparties ,” said Jonathan Ehrenfeld , strategy director at SWIFT . “ If there ’ s a corporate event , these asset managers and other intermediaries will receive information from all these sources , and this is where we start to see problems .” SWIFT added that participating in this initiative are a number of leading custodians and asset managers , including American Century Investments , Citi , Vanguard and Northern Trust . No other parties have yet been named . Symbiont ’ s private blockchain solution enables pilot participants to unlock numerous opportunities , SWIFT explained . The Assembly platform supports greater transparency through the creation of a single unalterable record , which provides a digital audit trail , privacy , versatility and the delivery of key statistical data . “ By bringing Symbiont ’ s Assembly and smart contracts together with SWIFT ’ s extensive network , we ’ re able to automatically harmonise data from multiple sources of a corporate action event ,” said Tom Zschach , chief innovation officer at SWIFT . “ This can lead to significant efficiencies . Corporate action data from SWIFT messages is translated by the SWIFT Translator and uploaded in Symbiont ’ s blockchain . Their smart contract technology can then compare information shared between participants and flag discrepancies , contradictions or inconsistencies across custodians .” Global Custodian has reported on multiple research launches over the years regarding the cost and manual hindrances on corporate actions , along with various solutions from the likes of DTCC , IHS Markit and Northern Trust . In our most recent coverage , we highlighted how the question of how to achieve scale in the highly manual business of corporate actions has become a central theme for custodians , brokers and investors in 2022 , according to market research and benchmarking company , the ValueExchange . New research released by the firm showed that the average regional corporate action function is already costing market participants up to $ 5 million per year , at the same time as such departments are under massive pressure to grow . “ According to our analysis , manual activities – such as data cleansing , formatting and interpretation – account for around 30 % of the costs involved in processing corporate actions ,” added Ehrenfeld . “ That ’ s why we are collaborating with our community to deliver a solution that delivers accurate corporate action data to market participants in near real time .”
10 Global Custodian Fall 2022