The New York-based Axoni just finished a successful Series B funding round for $32M with some high-profile investors. Goldman Sachs, Y Combinator, Wells Fargo, JP Morgan, Andreessen Horowitz, and Citigroup. This investing round has caught the attention of many in the industry because many of these companies putting up their money are also clients of Axoni.
Ashwin Gupta, Managing Director of Goldman Sachs said:
“Axoni has established itself as a market leader in enterprise blockchain, delivering solutions that can be used at scale across financial markets. We are pleased to work with them as they execute their strategy.”
Thomas Richardson, head of Market Structure and Electronic Trading Services at Wells Fargonoted:
“The adoption of distributed ledger protocols in capital markets resembles the early days of adopting TCP/IP for distributed enterprise applications. We continue to be impressed with Axoni’s ability to facilitate such adoption by identifying use cases that could benefit from blockchain technology.”
One of the key drivers that is bringing in these heavy-hitters is Axoni’s distributed ledger work with DTCC (Deposity Trust & Clearing Corporation) and their Trade Information Warehouse. According to the press release, the two will be building a derivatives distributed ledger solution for post-trade processing based on existing TIW capabilities and interfaces with technology providers and market participants. The TIW service currently automates the record keeping, lifecycle events, and payment management for more than $11 trillion of cleared and bilateral credit derivatives. The clearing company is the crux between financial markets and DTCC is now integrating Axoni’s AxCore blockchain platform.
By moving part the clearing organization’s transactions to a shared, distributed ledger similar to that which lets bitcoin users send money without banks, the time to close and the middlemen required are both substantially reduced.
Greg Schvey, CEO of Axoni, said, “Deploying distributed ledger technology in production at this scale is a watershed moment for the industry. The combination of technology and business expertise being contributed to this project from across the participating firms is unparalleled and the benefits are clear. We look forward to working with DTCC and the project partners to bring those benefits to the market.”
In April, DTCC and Axoni announced a successful test run for credit default swaps. CDS transactions were selected because of their complexity and in this test the blockchain-based system apparently showcased its real-time transparency and perfect success rate. Essentially, especially in the case of an equity swap, blockchain has the ability to align data points and dramatically reduce settlement disagreements. This is all backed by mathematical proof that everyone agrees on.
This kind of disruptive technology would be touching the backbone of the financial markets.