National Stock Exchange of Australia looks to facilitate same-day settlement via iSignthis

National Stock Exchange of Australia NSX iSignthis ASX ISX strategic investment
iSignthis has teamed up with the National Stock Exchange of Australia to develop and implement a same-day settlement, blockchain-based platform for the exchange.

National Stock Exchange of Australia (ASX: NSX) has emerged from a trading halt with news it has entered into a joint venture with iSignthis (ASX: ISX), which is currently suspended from trading due to an ongoing battle with the ASX.

The companies revealed this morning they had executed a shareholders agreement to form ClearPay, which will be a joint venture vehicle charged with developing a multicurrency, real-time, same-day Delivery versus Payment platform.

It is planned the platform will also be integrated with iSignthis’ ISXPay and Paydentity products.

Real-time and same day clearing of share trades

According to the National Stock Exchange, ClearPay will enable it to offer same-day settlement capability, which will supersede the current process offered by other domestic and global exchanges.

The current settlement period can take between two or three days.

Once the ClearPay platform has been completed, the National Stock Exchange expects the domestic and international broker network will expand and connect via industry-standard interface and participate using industry-standard blockchain.

“This will provide the National Stock Exchange with one of the world’s most advanced Delivery versus Payment platforms, inclusive of an inbuilt [blockchain-based] sub-registry,” the National Stock Exchange stated.

ClearPay joint venture terms

Under the joint venture terms, National Stock Exchange will invest $3.2 million into ClearPay for a 41% stake in the entity.

iSignthis will retain the other 59% and will contribute its intellectual property. The company’s subsidiary Probanx Solutions will head up the design and development of the distributed ledger technology-based platform for a fee and integrate the platform into ISXPay and Paydentity.

National Stock Exchange will then contribute a further $1.3 million to secure an extra 9% interest in ClearPay giving it a 50% stake.

This remains dependent on the exchange raising $3.8 million under a proposed placement.

“Market commentators are in broad agreement that cash equity exchanges are facing a global technology revolution, which is challenging legacy methods of clearing and settlement,” National Stock Exchange acting chief executive officer Thomas Price said.

“Having patiently monitored the development of the appropriate technology and know-how, we consider that this is the right time for the National Stock Exchange to act.”

He added the ClearPay joint venture enables the exchange to expedite its transformation in a cost-efficient framework.

“The introduction of an already experienced provider of RegTech and payments systems is very satisfying for us as it allows an accelerated build process.”

“More exciting is that it creates a solid foundation for the National Stock Exchange to be a true independent first-class venue of choice for companies seeking to be serviced via the most advanced infrastructure and distribution in their goal attracting investors from both here and abroad,” Mr Price said.

ASX scrutinises iSignthis

iSignthis launched Australian Federal Court proceedings against the ASX in December last year, alleging breaches of “procedural fairness” in the exchange’s to decision to keep its shares suspended from trade since the start of October, without prior notice.

The first hearing in the proceedings was scheduled for 7 February, with a case management hearing scheduled for 13 March.

iSignthis noted at the end of January, it was also under review by another international proxy advisory firm.

However, in this review, iSignthis described the preliminary “for comment” report from the firm as “favourable” and noted it would be responding within the next six weeks.

iSignthis claims the remained suspension from trading has impacted its growth and “dampened some demand from potential customers”.

“The company remains positive in outlook, and continues with business as usual, with the impact of the suspension continuing to be assessed,” iSignthis added.

In its announcement regarding its legal proceedings, iSignthis pointed out it had answered “scores of questions and provided more than 2,000 pages of confidential documents dating back almost three years”.

iSignthis also noted it had not received a “substantive question about the actual reason for the suspension”.

The company also raised the discrepancy in the ASX’s decision to allow Westpac Banking Corporation’s (ASX: WBC) shares to continue trading despite Federal Court proceedings against the bank for 23 million alleged breaches of anti-money laundering laws.