Joining the Paxos Settlement Service could permit many Bank of America clients and customers to settle stock exchanges in minutes as opposed to days.
The second-biggest bank in the United States is currently allegedly utilizing blockchain technology for settling stock exchanges.
As indicated by a Bloomberg report on Monday, Bank of America has joined Paxos Settlement Service, a platform equipped for same-day settlement of stock exchanges utilizing blockchain innovation. Kevin McCarthy, head of financing and clearing, said the bank.
“has been conducting internal transactions for the past few months” and would offer the service to Bank of America clients upon approval as a clearing agency.
The move would reportedly allow for a “more flexible and speedier” stock settlement system compared with that of the Depository Trust & Clearing Corporation, or DTCC, in which Bank of America is a direct participant. The DTCC settlement time is roughly two days, whereas Paxos’ service is capable of settling some stock trades in minutes.
“We can determine the settlement cycle down to T+0,” said McCarthy. “We then can free up the collateral we’d have to post on an overnight basis. […] The return-on-assets in this business would improve, which has been a challenge.”
Paxos officially launched its settlement service for equity trades in 2019 after receiving no-action relief from the U.S. Securities and Exchange Commission. Credit Suisse, a Zurich-based financial institution, and Instinet, the trading arm of Nomura Holdings, both participated in the pilot, settling U.S.-listed stock trades on the same day.
The stablecoin administrator reported in April that it had applied for a clearing organization permit with the SEC. Paxos likewise recently finished a $300-million subsidizing round, which carried its valuation to $2.4 billion.