13 Dec Pilot to test digital transformation of Australian capital markets
JOINT MEDIA RELEASE
Emerging RegTech company Imperium Markets has joined the Digital Finance Co-Operative Research Centre (DFCRC) to advance Australia’s first pilot and accelerate the digital transition of wholesale Money Markets and Debt Capital Markets.
The pilot presents an opportunity for Australia’s banks and regulators to explore the benefits of the Imperium Markets digital ecosystem. The pilot will include testing of multiple digital currency settlement options using Distributed Ledger Technology (DLT).
Imperium Markets has operated a wholesale market for deposits and bonds for five years – it was the first RegTech in Australia to be granted a Tier 2 Markets Licence by the Australian Securities & Investment Commission (ASIC).
Other markets (equities, futures, commodities, foreign exchange) have transitioned to electronic trading, but Money and Debt Capital Markets remain largely analogue, relying on spreadsheets, phone calls and emails – and settlements that take two-to-three days to reconcile.
Imperium Markets Chairman, Rod Lewis, said the pilot is a chance for both the market and regulators to explore the efficiencies of a digital market using Imperium’s live marketplace and settlement sandbox.
“Distributed Ledger is the biggest advancement we’ve seen in markets in a generation,” Mr Lewis said.
“Tokenised assets, atomic settlement and custody on ledger will change markets forever.
“Money Markets and Debt Capital Markets are vital to the economy, but in their current analogue state, they will never reach full potential. The time and costs associated with transactions are a barrier for growth.
“We need to lift the sense of urgency on digital adoption within Australia so our nation does not fall behind what’s occurring in global markets.”
DFCRC CEO, Dr Andreas Furche, said the pilot will measure inefficiencies and identify risks that currently exist in the market, while demonstrating all the benefits of digital technology.
“We are very pleased to partner with Imperium Markets on this exciting new pilot,” Dr Furche said.
“Specifically, the pilot will aim to demonstrate to the market, and to regulators, the improved liquidity, transparency and efficiency created when markets adopt digital assets.”
The pilot will provide real-time market data to the participants and to regulators, whilst providing a cybersecure marketplace.
It will also demonstrate the removal of settlement risk and counterparty risk through atomic settlement.
“We believe that the digital transition of regulated markets is inevitable. It will lead to market-based solutions for large-scale transactional processes that are still conducted inefficiently.
“The ability for digitised assets to be instantly exchanged and settled, allows for transaction processing with no systemic or counterparty risks. This is truly transformational, and Imperium Markets’ pilot is a great case study for these developments,” Dr Furche said.
The pilot will use Imperium’s existing Amazon Web Services cloud-based digital marketplace, and their global partner R3 Corda’s highly regarded DLT.
The partnership with DFCRC will also fund academic researchers to produce a whitepaper on the pilot findings, which will be peer-reviewed and published in financial journals.
The pilot will commence in the first quarter of 2023 and run for 12 months.