State Street Corp. Has Been Appointed by the Digital Securities Depository Corporation
As the world of finance becomes ever larger and we rely ever more closely on digital technology to manage the data associated with securities trading, more sophisticated solutions are required to facilitate cross-border transactions.
Differences in currency, best practices, regulations, and more all have a role to play in determining the effectiveness of international securities trading. Existing market players need a method of coming together to create and implement a more efficient cross-border securities processing paradigm in digital format and with an international infrastructure.
One organization which has been facilitating this kind of relationship – initially with the goal of bringing UK-based public equity across the Atlantic to the United States of America, but with an eye already set on additional markets – is the Digital Securities Depositary Commission and it has recently made a brand-new partnership to assist it in doing so.
State Street Corp.
The new partnership will see Boston-based American financial services and bank holding company, State Street Corp. appointed to provide custody services to the Digital Securities Depositary Commission.
This will help the Digital Securities Depositary Commission better operate its novel cross-border securities settlement infrastructure with its base of third-party regulated financial institutions and more efficiently create issue and service digital depositary receipts in the US public market.
"We deliver financial market infrastructure that modularizes and unbundles all the securities services in the industry to level the playing field, drive efficiency and growth for more market participants," said the Digital Securities Depositary Commission. "In addition, our infrastructure is operated and governed by all participating financial institutions in a highly resilient way and on a mutualized cost basis for everyone involved."
To fulfil its side of the partnership, State Street Corp. will provide safekeeping, transaction settlement, dividend collection, and FX payment services to the Digital Securities Depositary Commission with respect to its holdings of non-US listed equity securities and deliver the UK’s FTSE 350 constituent equities more efficiently into the hands of eager investors across the pond.
"State Street is delighted to be working with DSDC to support its growth strategy to diversify into additional markets," said Head of State Street Digital, Nadine Chakar. "This mandate is another example of State Street Digital continuing to deliver on our broader global strategy of helping to build out the crypto and digital assets ecosystem."
State Street Digital
One of the most interesting facets of this partnership is the fact that both State Street Digital and the Digital Securities Depositary Commission are both freshly launched endeavors.
The new State Street Digital division builds on State Street Corps’ significant existing digital capabilities and focuses on innovations in cryptocurrencies, central bank digital currency, blockchain, and tokenization. State Street’s GlobalLink technology platform – ranked number one in overall Market Share for Multi-Dealer Platforms and as a Leader in Real Money four years running – is also a component of State Street Digital.
"State Street is one of the largest and most respected custodians globally," said CEO of the Digital Securities Depositary Commission, Alistair Jones. "Having them take care of the custody activities for the underlying securities of our digital cross-border securities brings considerable confidence to both investors and our other network members. This allows us to concentrate on our core competencies of building and expanding the network beyond the initial group of regulated institutions."
"As institutional investors search for better returns and diversification, they continuously look for investment opportunities that deliver those benefits," added CEO of KALYP Technologies [the UK-based tech provider which enables the Digital Securities Depositary Commission infrastructure] Thorsten Peisl. "The traditional American Depository Receipt structure that the market understands is a very convenient tool for diversification and remains in place. However, the servicing component, which has been around since the 1920s and has severe shortcomings, will receive a major upgrade from DSDC’s distributed market infrastructure."
This partnership will certainly play a significant role in managing the flow of digital securities trading data between the UK and the US and will make a greater number of lucrative investment opportunities available to investors here – all the while being aware of and remaining within the regulatory frameworks of both countries.
Final Thoughts
Securities investment is only going to grow in scope and, thanks to the increasingly connected world in which we live, distance and borders are becoming steadily less of an obstacle when it comes to brokering these kinds of deals.
However, concerns then become more focused around how best to manage the flow of data relating to these transactions across border and through varying regulatory requirements and it’s encouraging to see brands such as State Street Corp. and the Digital Securities Depositary Commission partnering to help solve these challenges.