About a-team Marketing Services
The knowledge platform for the financial technology industry
The knowledge platform for the financial technology industry

A-Team Insight Blogs

Archax’s FCA Approval Paves Way for Institutional Trading of Digital Assets

Subscribe to our newsletter

London-based Archax last week received long-awaited regulatory approval for its digital securities exchange for tokenised assets. The development makes Archax the first FCA-regulated digital exchange, paving the way for institutional market participants to trade in tokenised assets when the exchange launches sometime in 2021.

Archax was founded by a group of market practitioners to offer institutional-grade issuance, trading and custody facilities for digital assets, by which participants are able to take real-world assets, such as real estate, equity, debt or funds, and tokenise them using blockchain technology.

According to Archax chief marketing officer Simon Barnby, the exchange seeks to offer the level of service and security that institutional market participants are used to. “We are about tokenising assets on the blockchain, then facilitating selling and trading those tokens. for institutions to do that, the venue needs to be regulated. We’re basically trying to do this in the way it’s done in existing institutional markets.”

The exchange hopes that the fact that it is an FCA-regulated market based in London, equipped with an institutional-grade matching engine and trading surveillance in the form of Aquis Technology’s platform, R3’s private Corda blockchain for post-trade, a FIX interface for connectivity, and its own custody services function, will provide a similar experience for institutions seeking to take advantage of digital securities as a new asset class. Archax’s management team is also comprised of experience market participants, and includes former London Stock Exchange strategy head David Lester.

So far, institutional players’ ability to participate in the promising digital securities segment has been limited, with the few existing digital asset exchanges based in relatively obscure jurisdictions such as Estonia, Malta and the Seychelles. While SIX has launched its own SDX digital exchange, this seeks largely to replicate its existing marketplace in a blockchain environment, while the tZero initiative is focused almost exclusively on the US.

Barnby says that Archax has been encouraged by interest in its offering to date. While it has received indications of interest from all the major investment banks, it expects early adopters to be more flexible organizations like smaller specialist brokers and hedge funds. So far 12 brokers and three market-makers have signed up to participate. Archax says it has 35 issuances in the pipeline, with tokenisation ranging from real estate to equity and debt funds.

The FCA approval covered four areas: the exchange itself, broker permissions, custodian services and crypto asset regulation, with this latter element required under the 5th AML Directive. The approval process took more than a year, during which time Archax built out its own custodian capability, which it is now able to offer as a standalone service for digital assets. Concerns about AML and KYC have been a significant obstacle to institutional uptake of digital assets and cryptocurrencies.

Subscribe to our newsletter

Related content

WEBINAR

Upcoming Webinar: Enhancing Buy-Side Trading Efficiency: Navigating Interoperability and AI in Real Workflows

Date: 26 June 2024 Time: 10:00am ET / 3:00pm London / 4:00pm CET Duration: 50 minutes Enhancing Buy-Side Trading Efficiency: Navigating Interoperability and AI in Real Workflows Emerging capabilities in AI and interoperability are transforming trading workflows, with the promise of heightened levels of collaboration and personalisation resulting in greater efficiency and performance. The potential...

BLOG

Modernising the Front to Back Trading Workflow: Getting Ready for T+1 SEC Settlement

With less than three months to go before the North American securities markets transition from T+2 settlement to T+1, firms have faced numerous operational challenges in adapting to the shortened settlement cycle, and have been making comprehensive preparations to modify their existing processes to comply. As the deadline approaches, what are some of the key...

EVENT

Data Management Summit New York City

Now in its 14th year the Data Management Summit NYC brings together the North American data management community to explore how data strategy is evolving to drive business outcomes and speed to market in changing times.

GUIDE

Regulatory Data Handbook – Fourth Edition

Need to know all the essentials about the regulations impacting data management? Welcome to the Fourth edition of our A-Team Regulatory Data Handbook which provides all the essentials about regulations impacting data management. A-Team’s series of Regulatory Data Handbooks are a great way to see at-a-glance: All the regulations that are impacting data management today A...