Fintech weekly deals and partnerships roundup

FT: Vanguard and Ant Financial team up for mutual funds adoption in China

Pennsylvania-based Vanguard has just agreed an investment advisory joint venture with Ant, a subsidiary of the Chinese ecommerce group Alibaba, as part of a China government-backed pilot scheme designed to drive up the adoption of mutual funds. Vanguard, the world’s second largest asset manager, has used its core message about the importance of keeping investment costs low to build an army of more than 20 million clients worldwide. But this is dwarfed by Ant’s technology platform, which provides access to 700 million potential investors across China.

Ant is gradually opening up its platform, which allows investors to shift money from online bank accounts into investment funds to third-party asset managers. The decision to widen the range of products available on the platform was made to head off the potential for systemic risks developing on the back of Ant’s success in attracting inflows into a money-market fund known as Yu’e Bao or leftover treasure. Assets held in Yu’e Bao reached a peak of about $250bn in 2018, illustrating the power of Ant’s technology to drive investor inflows.

Details of the agreement between Vanguard and Ant are scarce as neither company is prepared to discuss its objectives before the official launch announcement later this year. The Vanguard-Ant joint venture is expected to target the “mass affluent” sector of the market instead of the rich investors serviced by established wealth managers.

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Crypto exchange Seed CX picks Corvil for market monitoring in bid for institutional investors

Corvil announced it’s been selected by digital asset exchange, Seed CX, for institutional grade market monitoring. Seed CX’s execution and settlement ecosystem for trading digital assets seeks to establish a new standard for reliability and performance in this rapidly evolving asset class.

Geared to institutional investors, Seed CX is aiming at offering deeper markets, better security, and broader capabilities for settling trades, facilitating cross-border payments, and margin trading, and the exchange is a strong proponent of advancing the role of crypto assets in the financial sector.

Corvil provides visibility across Seed CX’s multiple client access options (including colocated cross-connects, VPN access, and web-based access through AWS infrastructure) and proprietary binary protocol. This means support teams can understand technology infrastructure and trading behavior as it happens, simplifying the process of responding to order related client queries.

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Credit Suisse confirms InvestLab sale to Allfunds

Credit Suisse and Allfunds Group have entered into an agreement to combine the Credit Suisse open architecture B2B investment fund platform, Credit Suisse InvestLab, with Allfunds. The agreement will create a global fund distribution platform with combined assets under administration (AuA) of more than CHF570 billion ($584.8bn). The deal is expected to close in Q3 2019.

The transaction comprises the transfer of all shares in Credit Suisse InvestLab, including the service agreements, and the related distribution agreements of Credit Suisse to Allfunds Group. As part of this combination, Credit Suisse will become a minority shareholder of up to 18% in the combined business and will be represented at the Board. Going forward, Credit Suisse will utilize the combined business platform to distribute mutual funds and ETFs.

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Digital Asset integrates smart contract language with partners across platforms

Digital Asset, creators of the DAML smart contract language, announced today that its partners, HACERA and Blockchain Technology Partners, have successfully integrated DAML with the Hyperledger Fabric and R3’s Corda blockchain platforms, and Aurora cloud storage engine on Amazon Web Services (AWS).

DAML is an open source platform-agnostic smart contract language designed for use in multi-party business processes. DAML abstracts away the underlying complexities of blockchain platforms, allowing developers to focus purely on the business logic of the applications while giving clients deployment flexibility as well as application portability.

This announcement increases the number of DAML deployment options, following earlier announcements that integrations are underway with VMware Blockchain and Hyperledger Sawtooth, making Hyperledger Fabric the second Hyperledger framework that DAML smart contracts can run on.

“Hyperledger Fabric and Hyperledger Sawtooth are two of the most widely adopted blockchain platforms. Hyperledger members collaborating to integrate open source projects increases each of their value to more than the sum of the parts, enabling developers to write DAML applications once and choose which platform to deploy to,” said Brian Behlendorf, Executive Director of Hyperledger, in a statement.

Corda is a leading open source blockchain platform developed by enterprise blockchain software firm, R3. With one of the strongest partner networks in the enterprise blockchain space, the DAML integration means partners and developers in the Corda ecosystem can further accelerate the development of distributed applications on Corda in production.

Due to strong customer demand, Amazon Aurora will be the first DAML integration with a traditional cloud-native database. This means that developers can write DAML applications and deploy to not only a growing number of blockchain platforms but also leverage its unique capabilities for highly performant applications that do not require the trust properties provided by decentralized platforms.

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Xanadu Raises $32mn for cloud quantum computing 

Canadian quantum computing startup Xanadu has announced it has raised $32 million in Series A financing. Xanadu designs and integrates quantum silicon photonic chips into existing hardware to create truly full-stack quantum computing. Founded in 2016 by CEO Christian Weedbrook, it makes use of the discovery that particles of light can be used for quantum computing to perform extremely fast and incredibly complex computations at room temperature.

OMERS Ventures led the round with participation from Georgian Partners, Radical Ventures, Real Ventures, Silicon Valley Bank and venture capitalist Tim Draper. The round brings Xanadu’s total investment to date to $41 million.

Weedbrook said in a statement: “In addition to solving a different set of important problems across industries, using photonics, we have the potential of having an all-optical quantum data center. As photonics is a natural underlying substrate for many quantum technologies — quantum computing, quantum sensors, and quantum security — our platform can be used throughout the larger quantum technology sector.”

The cloud offering will incorporate Xanadu’s two main software products: Pennylane, which lets users run quantum machine learning algorithms on any currently available quantum computing hardware, including devices from IBM, Google and Rigetti, in combination with popular machine learning tools like PyTorch and TensorFlow; and Strawberry Fields, a full-stack platform for photonic quantum computing that provides the main access point for Xanadu’s photonic quantum computers, as well as a suite of special-purpose quantum simulators.

It’s expected that developers, customers, and scientific researchers will access these computational tools to create new algorithms and design new products for solving real-world problems.

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DataRobot acquires California-based ParallelM

Enterprise AI firm DataRobot announced it has acquired ParallelM, which created the machine learning operations (MLOps) category that helps organizations scale the deployment, management, and governance of machine learning in production using any ML platform on any cloud or on-premise environment. Financial details were not disclosed.

Despite the massive investments in data science teams, platforms, and infrastructure, as well as a dramatic increase in the number of active AI projects, the value derived from these investments is grossly lacking due to the inability to deploy AI models into production. According to industry analysts, only a small percentage of AI models make it into production, and the few AI models that do severely lack the necessary governance and monitoring required to ensure the AI can be trusted. Effective and responsible use of AI requires a modern system to deploy, monitor, manage, and govern both models and projects through every step of the AI lifecycle.

As part of the acquisition, DataRobot will expand its platform’s current model monitoring and management capabilities to include an industry-leading MLOps and Governance offering that accelerates the AI lifecycle for all projects regardless of ML platform, programming language, or deployment scenario: DataRobot’s fully managed AI Cloud, private cloud, multi-cloud, on-prem, or hybrid. The ParallelM acquisition is DataRobot’s fourth acquisition in approximately two years, which included: analytics platform Cursor; machine learning API provider, Nexosis; data analysis firm Nutonian, according to CrunchBase.

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EIB, Euroclear, Banco Santander and EY team up for ECP blockchain

European Investment Bank (EIB), Euroclear, Banco Santander, and EY have worked together on an end-to-end blockchain solution for the issuance and settlement of European Commercial Paper (ECP). The proposed blockchain solution will reduce time-consuming bilateral processing between multiple market participants, providing one efficient consolidated hub for the issuing of ECP with DVP settlement by Euroclear.

Other key benefits of this blockchain solution would be full transparency and traceability of ECP issuance related activities; a reduction in operational costs and true time optimization, making ECP same day issuance, a new market standard. Euroclear intends to move on to a pilot phase soon. Other ECP issuance institutions have expressed interest and will be invited to participate in the pilot phase.

Edwin De Pauw, head of Data Services and Innovation at Euroclear said in a statement: “Our ambition is to deploy an efficient blockchain powered solution that supports further growth of intra-day issuance for ECP markets.” and Peggy Nylund Green, director of Planning and Settlements of Operations at EIB, the lending arm of the European Union, said in a statement that  “we will be pleased to see further innovations in the ECP market.”

John Whelan, Head of Digital Investment Banking, Banco Santander said in a statement: ”This proof of value further validates the potential impact of blockchain technology on the securities issuance process, where there is a huge opportunity to introduce efficiencies, reduce time-to-market and improve the experience for issuers and investors.”

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IHS Markit updates on SFTR partnerships

Pirum Systems and IHS Markit have successfully completed a full end-to-end test with Rabobank, including ingestion, enrichment, validation and submission of Securities Financing Transactions under SFTR from trade capture through to reporting to The Depository Trust & Clearing Corporation (DTCC)’s Global Trade Repository (GTR) service.

There are 48 firms using IHS Markit and Pirum Systems’ SFTR solution, and those firms now have the connectivity through to TR submission to test the end-to-end services, prior to pre-production testing in Q3 2019. Allan Bolk, head of Securities Finance at Rabobank said in a statement: “This successful test result confirms we have made the right decision by entering in this partnership for the SFTR solution and we feel confident to be fully prepared for SFTR go live.”

Pierre Khemdoudi, managing director and global co-head of Equities, Data and Analytics at IHS Markit said in a statement: “Our testing environment can now be leveraged to submit trades for data validation, enrichment, report creation, ISO transformation and TR submission. This will allow firms to onboard and integrate to our joint SFTR solution, while running pre-production testing to identify and remediate issues, ahead of the reporting start date in April 2020.”

In a related, separate announcement, Calypso Technology and IHS Markit announced a partnership on SFTR reporting. Calypso is a provider of cross-asset front-to-back technology solutions for financial markets, and the aim of the partnership is to make the Securities Financing Transactions Regulation (SFTR) reporting process as seamless as possible for common clients of both companies.

Calypso is already building upon its cross-asset product suite and post-trade processing, collateral and securities finance platform to help clients meet SFTR reporting requirements. This strategic alliance with IHS Markit, which partners with Pirum Systems for SFTR delivery, further extends the support available to clients, and facilitates integration, reduces significantly the time to market and amount of work needed to be done by each client. It will be supported by Calypso moving forward.

Andreessen Horowitz, Facebook among firms announcing Libra “internet of money” crypto initiative

A slew of organizations have set up the Libra Association, headquartered in Geneva, and released a whitepaper about its initiative for a global currency. The idea is to create a new kind of digital currency built on the foundation of blockchain technology. The mission for Libra is a simple global currency and financial infrastructure that empowers billions of people. Libra is made up of three parts that will work together to create a more inclusive financial system:

  • It is built on a secure, scalable, and reliable blockchain;
  • It is backed by a reserve of assets designed to give it intrinsic value;
  • It is governed by the independent Libra Association tasked with evolving the ecosystem.

The Libra currency is built on the “Libra Blockchain.” Because it is intended to address a global audience, the software that implements the Libra Blockchain is open source — designed so that anyone can build on it, and billions of people can depend on it for their financial needs.

The unit of currency is called “Libra.” Libra will need to be accepted in many places and easy to access for those who want to use it. In other words, people need to have confidence that they can use Libra and that its value will remain relatively stable over time. Unlike the majority of cryptocurrencies, Libra is fully backed by a reserve of real assets. A basket of bank deposits and short-term government securities will be held in the Libra Reserve for every Libra that is created, building trust in its intrinsic value. The Libra Reserve will be administered with the objective of preserving the value of Libra over time.

The initial group of organizations that will work together on finalizing the association’s charter and become “Founding Members” upon its completion are, by industry:

  • Venture Capital: Andreessen Horowitz, Breakthrough Initiatives, Ribbit Capital, Thrive Capital, Union Square Ventures
  • Technology and marketplaces: Booking Holdings, eBay, Facebook/Calibra, Farfetch, Lyft, MercadoPago, Spotify AB, Uber Technologies, Inc.
  • Payments: Mastercard, PayPal, PayU (Naspers’ fintech arm), Stripe, Visa
  • Telecommunications: Iliad, Vodafone Group
  • Blockchain: Anchorage, Bison Trails, Coinbase, Inc., Xapo Holdings Limited
  • Nonprofit and multilateral organizations, and academic institutions: Creative Destruction Lab, Kiva, Mercy Corps, Women’s World Banking

Read the full whitepaper

MIT and China’s HiCore Tech team up for unsupervised learning against fraud

Online fraud detection company Shanghai HiCore Tech announced it will cooperate with the Massachusetts Institute of Technology (MIT) to establish an artificial intelligence (AI) lab in an attempt to keep track of fraudulent financial deals.

The partnership aims to develop cutting-edge anti-fraud technologies by creating specialized unsupervised machine learning. So far, the domestic financial-tech sector has been slow to adopt unsupervised machine learning due to the extensive data collection required by its meticulous algorithms.

HiCore Tech provides anti-fraud services to over 2,000 financial institutions, covering banking, consumption finance, loans and internet finance. “We hope to apply the world’s most advanced algorithms to the industry and serve the financial sector well,” said Xu Yunbo, the technological superintendent of HiCore Tech.

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IIAC teams up with Willis Towers Watson for cyber insurance

The Investment Industry Association of Canada (IIAC) announced a partnership with Willis Towers Watson (WTW) to develop cyber liability insurance designed for IIAC Members. The objective of IIAC and WTW is to make available a wider and more comprehensive cyber liability solution at a much lower cost as group buying is expected to generate significant savings and advantages for IIAC members.

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