Bank of America has joined the Paxos Settlement Service, which is a platform that uses blockchain technology to achieve same-day settlement of stock trades.
The bank joins Swiss financial giant Credit Suisse and Japanese bank Nomura Holdings on Paxos Trust’s network, Bloomberg reported Monday.
Bank of America will offer the service to clients if it’s approved as a clearing agency, Kevin McCarthy, the bank’s head of financing and clearing, said.
“We can determine the settlement cycle down to T+0,” McCarthy said, using a term that refers to the ability to complete a transaction on the same day the trade was made. “We then can free up the collateral we’d have to post on an overnight basis,” helping to improve the return on assets.
Paxos used its Ethereum-based system to achieve same-day settlement in partnership with Credit Suisse and Nomura trading arm Instinet in March.
According to Bloomberg’s report, Paxos CEO Chad Cascarilla said his platform will put pressure on the Depository Trust & Clearing Corp. (DTCC), which currently dominates the business of settling stock trades. The DTCC canoffer same-day settlement only if trades are recorded by 11 a.m. ET. Generally, settlement takes up to two days.
The news marks Bank of America as the latest Wall Street giant to be joining blockchain projects that aim to reduce the time and costs of trading operations. JPMorgan Chase, for example, completed a live same-day trade between its broker-dealer and banking entity using its own stablecoin, JPM coin, in December.