Blockchain to enter European settlement system

One of Europe’s biggest securities settlement systems is set to welcome a blockchain-based depository after Setl, a UK fintech group, received a licence from French regulators.

The approval to run a central securities depository from the Autorité des Marchés Financiers, the main French securities regulator, is a further coup for proponents of blockchain technology, who argue it can be harnessed to improve slow and inefficient back-office settlement and cut the amount of collateral held up in global payment systems. Critics argue it is little better than some existing technologies on the market.

A depository, or CSD, is the part of the market plumbing where deals are finalised and cash is exchanged for securities. Its recognition will allow Setl to connect to the eurozone’s Target2-Securities platform, a €1bn European Central Bank-run project that speeds up cross-border payments.