Distributed Ledger Servicing Private Equity
Interests for Unigestion Delivers Transparency for Fund Manager,
Custodian, Investors, Regulators and Government
Northern Trust (Nasdaq:NTRS), in collaboration with IBM and
other key stakeholders, has launched the first commercial
deployment of blockchain technology for the private equity
market.
While private equity returns can be attractive, the
infrastructure supporting private equity has seen little innovation
in recent years at a time when investors are seeking greater
transparency, security and efficiency.
To address this need, Northern Trust and IBM built a
security-rich blockchain, or distributed ledger solution, based on
the Hyperledger Fabric. It is available for use for managing the
administration of a private equity fund managed by Unigestion, a
Geneva, Switzerland-based asset manager with $20 billion in assets
under management.
Northern Trust worked with Unigestion to create an innovative
private equity ecosystem designed to deliver increased efficiency,
security and transparency – all of which are longstanding
challenges.
The blockchain network provides real-time insight and
transparency to all parties, including the fund managers and
investors as well as allowing regulatory access when required.
Importantly, the blockchain network has been designed to support
compliance with current, local regulations. Both government and
regulator were kept informed during the development process.
The blockchain solution allows the fund to transfer ownership
stakes and be managed, serviced and audited throughout the
investment lifecycle on a transparent platform offering “one
version of the truth” to participants who gain access via secured
means. Initially, Northern Trust will make the solution available
to clients on a selective basis.
“Current legal and administrative processes that support private
equity are time consuming and expensive,” said Peter Cherecwich,
president of Corporate & Institutional Services at Northern
Trust. “A lack of transparency and efficient market practices leads
to lengthy, duplicative and fragmented investment and
administration processes. Northern Trust’s solution is designed to
deliver a significantly enhanced and efficient approach to private
equity administration.”
“Blockchain is an ideal technology to bring innovation to the
private equity market, allowing Northern Trust to improve
traditional business processes at each stage to deliver greater
transparency and efficiency,” said Arvind Krishna, Senior Vice
President of Hybrid Cloud and Director of IBM Research. “Based on
the Hyperledger Fabric and secured by IBM Blockchain’s high
security business network, IBM collaborated with Northern Trust to
build a powerful new enterprise solution using blockchain for the
private equity industry.”
“Northern Trust anticipates substantial opportunities to bring
improvements to the private equity market by using blockchain
technology,” said Justin Chapman, global head of market advocacy
and research at Northern Trust. “This is an important first step to
connecting participants much more effectively, including investors,
managers, administrators, regulators, advisors and auditors.”
The fund is domiciled in Guernsey, where Northern Trust has
offered a wide range of financial services since 1972.
“Guernsey has been at the forefront of innovation in the
financial industry for many years. As a jurisdiction we continually
monitor new technologies, support businesses in developing
ground-breaking new ideas and provide a supportive environment
where products can not only flourish but be first-to-market,” said
Chief Minister of Guernsey Gavin St Pier. “The fact that this
pioneering solution to the private equity market has been domiciled
in Guernsey, and that Northern Trust has collaborated with IBM to
provide a secured cloud solution with a high level of cryptography
to protect investor data, shows the commitment of Government to
being at the cutting edge of financial services technology.”
“Northern Trust has engaged with us as regulators from the start
and we are pleased with the level of openness and interaction,”
said Emma Bailey, Director of the Investment Supervision and Policy
Division of the Guernsey Financial Services Commission. “This is
another example of the Commission’s approach to innovation in the
Bailiwick’s financial services industry.”
Key stakeholder, General Partner Board, praised the development:
“By utilizing blockchain technology, Northern Trust has provided us
with an infrastructure which will enable the fund to be serviced in
a digital environment, introducing a new collaborative ecosystem to
the private equity market where all actions are undertaken on a
common, open and transparent platform. It is exciting to be at the
forefront of this new development for private equity.”
The solution developed by Northern Trust and IBM is based on the
open source Linux Foundation Hyperledger Fabric. Northern Trust is
also using IBM Blockchain’s high security business network with its
hardware assisted cryptography and key management to enhance the
safety and scalability of these transactions on the IBM Cloud for
cloud-based application development.
Northern Trust invests in cutting-edge technologies and
thoughtfully considers collaborations to create exceptional
experiences, deliver leading capabilities and provide advanced
protection. The company will explore expanding the new solution
into other asset classes and jurisdictions based on success in its
initial platform.
About Northern Trust
Northern Trust Corporation (Nasdaq: NTRS) is a leading provider
of wealth management, asset servicing, asset management and banking
to corporations, institutions, affluent families and individuals.
Founded in Chicago in 1889, Northern Trust has offices in the
United States in 19 states and Washington, D.C., and 22
international locations in Canada, Europe, the Middle East and the
Asia-Pacific region. As of December 31, 2016, Northern Trust had
assets under custody of US$6.7 trillion, and assets under
management of US$942 billion. For more than 125 years, Northern
Trust has earned distinction as an industry leader for exceptional
service, financial expertise, integrity and innovation. Visit
northerntrust.com or follow us on Twitter @NorthernTrust.
© 2017 Northern Trust Corporation. Head Office: 50 South La
Salle Street, Chicago, Illinois 60603 U.S.A. Incorporated with
limited liability in the U.S. Products and services provided by
subsidiaries of Northern Trust Corporation may vary in different
markets and are offered in accordance with local regulation. For
legal and regulatory information about individual market offices,
visit northerntrust.com/disclosures.
About IBM
IBM is rapidly actively working with companies to make
blockchain ready for business. Financial services, supply chains,
IoT, risk management, digital rights management and healthcare are
some of the areas that are poised for dramatic change using
blockchain networks.
For more information about IBM Blockchain, visit
www.ibm.com/blockchain.
This release includes forward-looking statements concerning the
distributed ledger solution built by Northern Trust and IBM,
including expectations regarding the impact of such solution on the
private equity market, as well as opportunities for Northern Trust
to bring improvements to the private equity market by using
blockchain technology. The statements are based on assumptions
about many important factors, including the following, which could
cause actual results to differ materially from those in the
forward-looking statements: the ability of the company to develop
and commercialize additional enhancements to the distributed ledger
solution; the ability of the company to identify and execute on
opportunities to use blockchain technology in the private equity
market on a timely basis; applicable market and industry
conditions; actions of regulatory bodies and other governmental
authorities; changes in laws and regulations; and other risks
identified in Northern Trust’s most recent filing on Form 10-K and
other SEC filings, all of which are available on its website.
Northern Trust does not undertake to update its forward-looking
statements.
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version on businesswire.com: http://www.businesswire.com/news/home/20170221006398/en/
Northern TrustDoug Holt+1 (312)
557-1571Doug.Holt@ntrs.comorCamilla Greene+44 (0) 207 982
2176Camilla.Greene@ntrs.com
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