Distributed Ledger Servicing Private Equity Interests for Unigestion
Delivers Transparency for Fund Manager, Custodian, Investors, Regulators
and Government
Company Website:
https://www.northerntrust.com/
LONDON -- (Business Wire)
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 asopportunities 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.
View source version on businesswire.com: http://www.businesswire.com/news/home/20170221006398/en/
Contacts:
Northern Trust
Doug Holt
+1 (312) 557-1571
Doug.Holt@ntrs.com
or
Camilla
Greene
+44 (0) 207 982 2176
Camilla.Greene@ntrs.com
Source: Northern Trust
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