The worldâs first blockchain-based investment product has been launched using Microsoftâs cloud technology.
Nivaura, a UK financial technology firm that uses Azure, successfully registered, cleared and settled two Principal Protected Notes (PPN) linked to the FTSE 100 – one through the traditional clearing infrastructure and a second using an open public blockchain.
PPNs are an investment that guarantees the amount you invest but can also provide a profit if the value of the underlying asset rises. The issued instruments were two-month pound-denominated notes paying a coupon of up to 13% per year based on the performance of the FTSE 100 index.
Avtar Sehra, Chief Executive and Chief Product Architect at Nivaura, said that using the Ethereum blockchain will be cheaper for companies launching investment products as it reduces the need for middlemen and costs associated with post-trade registration, clearing and settlement. He pointed out that a retail firm in the UK used the technology to issue a bond last year and slashed the post trade administration costs, paid by issuers and investors, over the life of the instrument from Â£30,000 to just Â£50.
âVery little automation takes place in the financial industry and itâs hard to create something thatâs automated but flexible,â Sehra said. âOur system is completely automated, end-to-end. We track all the data, and the money flows in a compliant manner, executing the deal in a legal way and aligning with all regulations. It makes sense for issuers and investors.â
Nivaura chose to use Microsoft Azure because the platform complies with guidance released by the Financial Conduct Authority (FCA), the UKâs financial regulator. The FCA released guidance aimed at aiding firms from the financial services sector as they move workloads online â from deciding to outsource and selecting a provider, to monitoring how their data is handled. Nivaura has received f...