by Diana Ngo
Clearmatics Technology Ltd., the company working with UBS Group AG to develop a “settlement coin,” has completed its first round of funding led by Route Sixty-Six Ventures. Other investors included Tellurian Capital Management and Nyca Partners.
“What Robert [Sams] and Clearmatics are building is a real game changer and will revolutionize back office capital markets processes while setting the foundation for a new clearing and settlement paradigm for the next 20 years,” said Pascal Bouvier, General Partner of Route 66 Ventures. “I am a very strong believer in the true disruptive nature of distributed settlement networks in the capital markets space.”
Jean-Marc Bonnefous, managing partner at London-based Tellurian Capital, told Bloomberg:
“As a hedge fund ourselves, we can see the very significant benefits that this new digital settlement coin and the related distributed ledger market architecture will bring to the table in securities trading.”
In September, global investment bank USB engaged with Clearmatics to help it build a proof-of-concept for its “settlement coin,” a cross-border utility that supports central bank money on a distributed ledger payment rail to improve the payment leg of financial settlements.
Founded in February, London-based Clearmatics builds blockchain-powered clearing machines for OTC markets.
The company has developed a blockchain platform that brings together custodians and end-users on a single platform, where members can settle securities trades and automate the performance of derivatives and other financial contracts using smart contracts.
Clearmatics’ founder and CEO Robert Sams said the company has shown the concept to other companies and it has been well received.
“As of today, financial clearing and settlement cannot be considered as efficient,” Alexandre Callea, co-founder of Clearmatics, told Finyear in an interview. “Indeed, if the actual intermediation network can be considered as necessary for some – although opinions diverge on this matter -, the operational and technological processes in place are expensive, sub-optimized and risky.”
“For a simple payment to another currency, there can be six to eight financial institutions involved in the execution, each one processing the payment and recording it in the first instance; and reconciling it with other concerned parties in a second phase. On the Clearmatics platform, the entire process is accomplished in a few seconds.”
Clearmatics’ platform has many advantages over traditional processes in terms of speed and transparency. The real breakthrough here involves smart contracts, which bring the notion of “programmable assets and money” into reality, Callea said.
“In my opinion, it is a fundamental progress that has been largely under-estimated so far. Having the ability to assign financial assets behaviors that are automatically triggered through rules or pre-defined signals that are freely configurable, allows to free financial innovation and reduce dramatically counterparty risks, errors and fraud.”
UBS has identified 20 to 25 potential uses for blockchain technology, according to Oliver Bussmann, the Zurich-based bank’s chief technology officer.
In April, the bank became one of the first global financial institutions to go public with its blockchain plans, setting up a lab in London fintech accelerator space Level39 to experiment with the technology.
In addition to Clearmatics, the bank also unveiled earlier this year that it has been working with blockchain startup Eris Industries; it is also looking to collaborate with custodian BNY Mellon and Swiss telecom provider Swisscom.