BlackRock Inc. is embracing blockchain technology to make it easier to handle complex equity derivatives.
The world’s largest money manager joined Goldman Sachs Group Inc. and Citigroup Inc. on a distributed-ledger system called Veris, according to a statement Tuesday from Axoni, the financial-technology company that operates the platform. The network is designed to help firms match and reconcile post-trade data on stock swaps.
The global market for equity-linked forwards and swaps is about $3.6 trillion, up more than $1 trillion from four years earlier, according to Bank for International Settlements data. With the surge in volume, traders can face challenges confirming the details of trades, cash flows between buyers and sellers and other changes that can occur over the life of the derivative transactions.
Veris “will help us build scalability while mitigating risks in the investment life cycle beginning with equity swaps,” Mark Cox, BlackRock’s chief operating officer of global investment operations, said in the statement. “We see great potential in a distributed-ledger network for uncleared derivatives.”
BlackRock will integrate New York-based Axoni’s software with its Aladdin operating system, which was first developed to help track its own financial risk but is now sold to wealth managers and other clients. Last year, the company earned more than $1 billion in technology services revenue. Bloomberg LP, the parent of Bloomberg News, also sells financial risk software.
JPMorgan Chase & Co., Andreessen Horowitz, Goldman and Citigroup are among Axoni’s investors.