Fintech weekly deals and partnerships round-up

Torstone acquires cloud compliance tech company

Torstone Technology, a provider of post-trade securities and derivatives processing technology, has announced that it’s agreed to acquire Percentile, a provider of real-time, cloud-based risk and compliance technology to global financial markets. Both companies are London-headquartered and financial details are not disclosed. The Percentile risk management solution will form a component of Torstone’s platform for a full-service, cross-asset, global post-trade offering, including risk and compliance.

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Puerto Rico bank and exchange to launch single platform for fiat and digital assets

The San Juan Mercantile Bank and Trust International (SJMBT) announced that it has received its first client deposit and commenced operations, following the bank’s receipt last month of its license to operate from Puerto Rico’s Office of the Commission of Financial Institutions (OCIF).

This launch makes it one of the first institutions of its kind to give customers the ability to hold and manage both fiat currency and digital assets on a single integrated platform. Deposits of fiat currency are held by SJMBT on behalf of its clients with its regulated correspondent banks, and digital assets are held by approved digital asset custodians.

SJMBT offers fiat and digital asset custody and settlement services, and it is expected to be integrated with the trading platforms offered by its affiliate, the San Juan Mercantile Exchange (SJMX). Together, SJMX and SJMBT will provide an integrated end-to-end solution for institutional customers seeking a familiar, efficient and secure way to trade digital currencies.

Partnering with multiple custodians is intended to reduce costs and improve security. Based on the integration between SJMBT and the trading platforms of SJMX, customer balances on deposit with SJMBT will inform real-time trading limits at SJMX, enabling SJMBT to settle all trades routed through SJMBT on a real-time basis.

With the new customers onboarded at SJMBT, SJMX is able to launch exchange operations, via the SJMX Dark Pool platform and through SJMX Blocks, its over-the-counter (OTC) trading venue. SJMX plans to also launch a central limit order book (CLOB) trading platform, leveraging the global distribution capabilities of CQG, which is a provider of solutions for trading, global market data, and advanced technical analysis.

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DTCC partners with compliance fintech to expand trade reporting

The Depository Trust and Clearing Corporation (DTCC) announced it’s partnering with Droit, a company that specializes in real-time transactional compliance, to add to DTCC’s Pre-Reporting Transformation Services for supported G20 regimes as well as the forthcoming Securities Financing Transactions Regulation (SFTR).

The addition of Droit’s ADEPT platform will provide clients with the option of including pre-installed reporting decision-making as part of DTCC’s one-stop solution for both SFTR and derivatives reporting regimes. The joint offering means firms can apply reporting eligibility logic before submitting transactions to the relevant registered trade repository. Market participants can determine the full global cross-regulatory reporting implications and obligations associated with a transaction in real-time as well as receive complete auditability and traceability through to fully digitized regulatory text.

“Since 2014, Droit’s ADEPT platform has been invaluable to our clients in proving, to themselves and external parties, that reporting decision-making for each transaction is accurate and complete with respect to the laws in force at that time,” said Satya Pemmaraju, CEO, Droit, in a statement.

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Simudyne closes $6mn funding round led by Barclays

London head-quartered Simudyne announced it’s closed a $6 million Series A fundraise, led by Barclays alongside other institutions, including Graphene Ventures, an early investor in Snap and Lyft, and Gauss Ventures, whose team were early investors in Revolut and Tandem. Total capital raised since Simudyne was formed stands at $10 million. The fintech’s had 600% year on year increase in revenue in 2018 following the addition of new global banking clients.

The new funds will be used to invest in talent and accelerate its engagement with the financial services sector. It will also continue to expand the application of its enterprise-ready software beyond bank stress testing, financial risk and contagion management. New applications include market execution as well as anti-money laundering.

Traditional modelling approaches no longer capture the complexity of our dynamic world. Using agent-based simulation, the most accurate and advanced way to build prescriptive analytics on the complex adaptive environment we live in, Simudyne’s technology helps clients to quickly and easily simulate millions of scenarios. They can then test drive their decisions, fail fast without consequences and gain the foresight they need to drive growth.

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SMH: NAB mulls fintech partnerships

National Australia Bank is in discussions with two Israeli artificial intelligence and biometrics groups about ways to further the bank’s big data capabilities and to protect customers from emerging types of financial crime. A relationship with the (undisclosed) biometrics specialist group aims at further developing the ways it identifies suspect behavior by cybercriminals, and it has already run a pilot program with the group that is yet to be revealed.

The bank has also held talks with another Israeli group, Sparkbeyond, which has created a software platform that allows corporate users to combine internal data sets and external sources of data (such as government data or other customer service related data) to identify problems and formulate millions of possible hypotheses to find solutions.

NAB chief customer experience officer Rachel Slade said the bank was looking to use artificial intelligence to better use its data. “If I think about solving a problem through a traditional set of analytics that’s quite a long process, because we’ve got to figure out where the potential hotspots are and form the hypotheses and then get the data, then do the analysis and make sure it’s right. But technology that says I can rapidly form hypotheses and look for the hotspots would be incredibly helpful,” she said.

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Gibraltar bourse partners with Singapore startup for digital securities tech

The Gibraltar Stock Exchange Group, via its fintech subsidiary, Hashstacs, and STO Global-X announced a “turnkey DLT exchange-in-a-box” for the institutional trading, clearing and settling of digital securities to a regulatory standard. The firms will be integrating STGX’s tokenization platform and exchange technology with Hashstacs’ Securities Asset Trading Classification Settlement (STACS) Network. “We view this as the bedrock towards supporting other traditional financial functions in the areas of treasury, wrapped products and more,” said Nick Cowan, CEO of the GSX Group, in a statement.

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BNY Mellon and BlackRock partner on data and technology via Aladdin

Bank of New York Mellon and BlackRock, through its BlackRock Solutions business, announced a strategic alliance to deliver integrated data, technology, and asset management servicing capabilities to mutual clients. These new capabilities integrate BNY Mellon’s data insights, accounting, and servicing tools into Aladdin, BlackRock’s investment and operating platform for investment managers.

This collaboration builds on a multi-year effort by BlackRock Solutions and BNY Mellon to transform the investment manager operating model. These joint efforts, demonstrated through years of BNY Mellon servicing BlackRock, have already helped to increase transparency at multiple stages of the investment lifecycle, accelerate information delivery, and synchronize the data that supports core functions for asset managers.

BlackRock and BNY Mellon will now offer joint capabilities to mutual clients, bringing significant and immediate benefits to front office, technology, and operations teams, including:

  • Near real-time trade lifecycle information and more precise intra-day projections of net cash positions to enhance front office decision-making
  • Enhanced real-time insights and transparency, exception-based monitoring, and drill-down capabilities into core accounting and custody oversight functions
  • Closer data integration and shared workflows in Aladdin, substantially improving operational efficiency and processing rates
  • Along with these ready-to-deploy capabilities, BNY Mellon and BlackRock are working together on new solutions to provide clients additional flexibility and insights through the investment lifecycle from the front office to operations to accounting.

Hani Kablawi, CEO of Global Asset Servicing at BNY Mellon, said in a statement: “For clients who choose both firms, we can provide immediate value across their investment lifecycle and this a meaningful example of our commitment to work with third parties to more closely integrate the front-to-back operating model.”

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Regulated Canadian crypto fund picks KoreConX protocol for offering

KoreConX announced that 3iQ, Canada’s first regulated multi cryptoasset portfolio manager, has chosen the KoreProtocol for their digital securities offering. Founded in 2012, the company is the first Canadian investment fund manager to fully comply with the terms and conditions with the Canadian securities regulatory authorities to manage a multi-crypto asset investment fund, offering exposure to accredited investors for the first time.

KoreConX describes itself as a secure permissioned blockchain ecosystem for fully compliant digital securities worldwide. To ensure compliance with securities regulation and corporate law, it touts an all-in-one, AI-based blockchain platform that manages the full lifecycle of digital securities including issuance, trading, clearing, settlement, management, reporting, corporate actions and custodianship.

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Atos and Google Cloud open AI lab in France

French foreign minister Bruno Le Maire joined Atos and Google Cloud to inaugurate an artificial intelligence (AI) lab. Set up as part of the global partnership between Atos and Google Cloud, the lab aims to help clients, businesses and public organizations identify practical cases for AI use.

In its cloud and hybrid cloud datacenters, the lab ensures the security of both the data and the processing of it, as well as compliance with the European regulation on the protection of personal data. It’s for French and European clients to define concrete use cases where AI algorithms can provide high-performance solutions, via co-creation and solution prototyping workshops.

Thierry Breton, chairman and CEO of Atos, said in a statement: “Beyond economic development, being able to offer technological excellence while protecting European data is a matter of sovereignty. With this joint laboratory between Atos and Google Cloud, we are enabling the adoption of artificial intelligence by our clients by offering them the best technologies and the highest level of security for their data processing, all within a clearly defined European regulatory framework.”

In April 2018, Atos entered into a global partnership with Google Cloud to accelerate the creation of secure hybrid cloud solutions, data analysis and machine learning, as well as the connected work environment. The partnership includes the opening of three AI laboratories around the world  in London, Dallas and Paris.

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Japan crypto platform closes funding round and hits tech unicorn status

Global cryptocurrency platform announced the first close of an ongoing Series C funding that puts the company valuation at over $1 billion. This valuation establishes Liquid as one of only two tech unicorns in Japan’s startup space, a status achieved in less than five years for the fintech. Proceeds from the ongoing Series C funding will be used to fuel global expansion, product development of the core trading exchange business and entering into the security token market.

This latest round of funding is led by investment firm IDG Capital, which marks an addition to its current portfolio of crypto investments that includes Coinbase, Ripple, Bitmain and Kakao’s crypto unit. There was also participation from the world’s largest maker of cryptocurrency mining rigs, Bitmain Technologies, which follows their investment into ErisX, another derivatives and digital asset trading platform aiming to be a licensed CFTC-regulated futures market and clearinghouse.

Liquid has previously raised more than $20 million from venture funding, which includes Japanese investment firms JAFCO, SBI, B Dash Ventures, Mistletoe, and ULS Group. In 2017, Liquid raised more than $100m in a pre-discounted ICO raise, which was the first regulated ICO to be done in Japan.

Bitmain co-founder Jihan Wu said: “Japan is one of the leading nations in putting crypto industry under proper regulations, and Liquid Group has proven itself to be the exemplary player within such compliant rules. This is a very important and unique moat amid global competition.”

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AI asset management fintech Pagaya raises $25mn led By Oak HC/FT

Pagaya, a global fintech applying artificial intelligence (AI) to asset management, announced a $25 million Series C funding round. Oak HC/FT led the round with participation from Pagaya’s seed investor Viola Ventures, Clal Insurance, GF Investments, Harvey Golub (Pagaya board member and former chairman and CEO of American Express), and Siam Commercial Bank (through its Digital Ventures arm). The company will use the investment to develop its technology further and pursue new asset classes, such as real estate and other fixed-income assets like auto loans, mortgages and corporate credit.

The funding comes on the heels of the fintech creating the first $100 million consumer credit asset-backed security (ABS) fully managed by AI, which the company announced in February. In the three years since launch, Pagaya has grown to manage $450 million for banks, insurance companies, pensions funds, asset managers and sovereign wealth funds all looking to find new sources of attractive risk-adjusted returns and capitalize on the efficacy and efficiency of Pagaya’s AI.

Pagaya’s asset management team of 30 data scientists and AI specialists uses proprietary machine learning techniques to conduct bottom-up analysis and risk management of assets. The company analyzes hundreds of millions of data points and captures economic and market data to perform asset underwriting and better risk assessment compared to what traditional asset management firms can achieve.

Dan Petrozzo, venture partner at Oak HC/FT, former partner and global head of Investment Management Technology at Goldman Sachs, and former chief information officer of Fidelity Investments, said in a statement: “Institutions looking for stable investment solutions with higher returns will continue to turn to Pagaya as there is just no one else creating comparable opportunities.”

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AML “phonetic fingerprint” start-up launches on LSEG’s issuer market

Israeli fintech start-up FinCom.Co announced the launch of its services in the UK through the London Stock Exchange’s Issuer Services Marketplace. The firm has developed a proprietary “phonetic fingerprint” technology to help UK financial institutions and businesses stamp out money laundering activities, remain compliant with legislation, and improve efficiencies.

Developed for highly regulated sectors, FinCom.Co’s proprietary anti-money laundering (AML) platform uses advanced mathematics with its proprietary tech to aid customer verification and compliance in real time.

“Small – medium banks spend over $100 million annually to fight AML, which in turn costs the consumer,” said Gideon Drori, CEO and co-founder of FinCom.Co, in a statement. “The need for such solutions is key for businesses to remain compliant with current and future AML directives which can see individuals within organizations prosecuted for any wrongdoings.”

Proven to reduce false-positive results by over 90%, the phonetic fingerprinting technology, combined with artificial intelligence and multi-dimensional processes, can search records in over 25 languages. By converting names and other records such as country of origin and date of birth into mathematical sequences, the platform compares results with records across a host of sanction and blacklist databases, including OFAC (US) and HMT (UK).

The Financial Action Task Force estimates that money laundering activities can cost the global economy between $590 billion (equivalent to the economic output of Spain) and $1.5 trillion. True figures of financial loss as a result of money laundering cannot be identified as a high percentage of these transactions are untraceable. However, official figures show that in the last 10 years, institutions have been fined upwards of $300 billion for non-AML compliance.

Under section 19 of the EU AML regulation, businesses must actively seek new technologies to reduce their money laundering monitoring costs. To date, FinCom.Co has helped its customers meet this legislation by reducing the costs of AML monitoring. Since its launch in 2018, FinCom.Co has developed a number of strategic relationships with tier one banks and regulators, which are currently undisclosed, to support compliance and data management.

cPacket Networks acquires Solarflare’s SolarCapture Appliance business

cPacket Networks, a provider of network performance monitoring and packet broker solutions, has agreed with Solarflare to acquire the company’s SolarCapture Appliance business, which provides network traffic capture capability for a variety of IT NetOps and SecOps applications including compliance, service-level agreement monitoring, performance monitoring, security analytics, network forensics, and record keeping. Financial details were not disclosed.

Now an integral part of cPacket’s cStor (integrated packet forensics for advanced real-time-analytics) product-line, the combined solution provides 100% lossless capture for speeds up to 40Gbps. “Making the SolarCapture Appliance technology a permanent addition to our cStor product family enables us to extend our high-performance analytics offerings to our customers and deepen our reach into financial services and similar demanding industries,” said Brendan O’Flaherty, CEO of cPacket Networks, in a statement.

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