SWIFT explores blockchain to reduce ‘corporate action friction’

SWIFT, a Belgian cooperative that helps banks execute financial operations and payments is studying blockchain technology.

SWIFT explains this project’s motivation: “When an event occurs at a publicly listed firm, such as dividend payments, exchange offers, mergers, Dutch auctions, or other corporate activities, investors, creditors, and other important stakeholders must be informed immediately.

“Automation of these interactions has advanced over the last several years, but it continues to rely primarily on human procedures, which impose additional costs and risks on market players.

This complicates matters for asset managers, custodians, brokers, and other downstream users, since they get information about the same occurrence from several issuers, in some cases with missing, inconsistent, or inaccurate data. Then, they must manually search through, compare, and analyze the data to create a unified, accurate picture of the event in order to make important judgments.”

Jonathan Ehrenfeld, Director of Strategy at SWIFT, said: “Large asset managers will have hundreds of custodial arrangements, with assets and securities dispersed across a vast array of counterparties. These asset managers and other intermediaries will get information from all of these sources in the case of a corporate event, and here is where we begin to see issues.”

“According to our investigation, about 30 percent of the expenses associated with processing corporate actions are caused by human tasks, such as data purification, formatting, and interpretation,” explains Ehrenfeld. We are cooperating with our community to develop a service that provides reliable corporate activity data to market players in near real-time.

SWIFT is using the enterprise blockchain platform “Assembly” from Symbiont for this testing. 

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Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial or investment advice. Cryptocurrency investments are subject to market risks, and individuals should seek professional advice before making any investment decisions.

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