10018481Interoperability and liquidity optimisation within custody and collateral operationsClosedCollaborative R&DInnovate UKThe UK is the leading centre for wholesale international financial services. This position is maintained through a deep pool of expertise in technology, trading, post trade processing and financial innovation. SETL propose the development of an interoperability platform that will facilitate the operations of custodian banks, in particular collateral management. Financial institutions are making greater use of blockchain and distributed ledger technology to manage securities transactions through a process known as tokenisation. Tokenisation is the process of moving real world assets onto a blockchain. Once tokenised, securities can be transferred instantly with no transactions costs and minimal administration processes. However, there are many different blockchain infrastructures which create stand alone pools of securities. Currently securities cannot be seamlessly transferred between these pools. Examples of different blockchain infrastructures include Corda, Hyperledger Besu, HyperLedger Fabric, HyperLedger Sawtooth, JPM Coin and SETL. Transferring securities between banks with the same underlying blockchain will also require an interoperability platform. Collateral management is the process of temporarily transferring securities from one market participant to another in order to mitigate risk and is key to both liquidity and the efficient operations of financial markets. It is a global business, typically conducted by custodian banks, with an estimated £15 trillion of assets subject to collateral arrangements at any time. Collateral management can only achieve efficiencies when these pools can be connected, allowing securities to be transferred 24/7 between counterparties. This project aims to build a platform to transform collateral management processes by offering 24/7 collateral movement, automated processing and instant settlement across collateral pools and thereby increasing liquidity. SETL's approach is to create a platform that addresses the 4 key elements of interoperability, namely permissions, transactions, events and synchronisations. The solution will provide a common interfacing layer that will include an SDK (Software Development Kit) and a set of Open API's. Without an interoperability platform the benefits of cross blockchain tokenisation and efficient collateral markets will never materialise. SETL therefore proposes to create the first interoperability platform for Custodian Banks.