Northern Trust Moves to Scale Up Live Equities Blockchain

Chicago-based Northern Trust was one of the first banks to launch a live blockchain effort. Now, it's giving the platform an upgrade.

AccessTimeIconMay 8, 2017 at 12:15 p.m. UTC
Updated Sep 11, 2021 at 1:18 p.m. UTC

Northern Trust is preparing for more advanced applications of its blockchain platform.

After launching possibly the first fully functioning blockchain for trading private equities in February, the Chicago-based bank with $6.7tn assets under custody is now in the process of scaling up its work.

Initially comprised of four nodes powered by Hyperledger's open source Fabric codebase, and with Switzerland-based management firm Unigestion as the inaugural client, the blockchain has been processing transactions continually since the launch.

Over the next few months, however, Northern Trust plans to complete implementation of the beta version of Hyperledger's Fabric 1.0, the platform's signature distributed ledger technology which was first released in March and is one of several overall offerings.

Once complete, credentials will be given out to multiple clients, and the upgraded infrastructure will let the bank spin-up nodes for any number of limited partners, general partners and more.

Driven by what Northern Trust's senior vice president and global head of market advocacy, Justin Chapman, said was "significant interest," the bank began the upgrade in April, embarking on a process he predicted will take several months.

Chapman told CoinDesk

"The key for the upgrade is the expansion of the capabilities of nodes and scalability in that space for some of our clients who demand individual nodes."

The upgrade will also feature an improved development kit, designed to simplify the transition process.

Due to disclosure restrictions around the asset class, Chapman said he wasn’t able to reveal transaction volumes of the live platform. However, he did report that the activity within the fund had met expectations.

"We're comfortable we can scale that up across more funds," he said.

Product planning

Last year, a "big chunk" of Northern Trust’s blockchain investment went into issues of regulatory compliance with the Guernsey Financial Services Commission and the 48 other jurisdictions in which it is compliant. (The British Crown Dependency manages a node in which the investment vehicle is also compliant.)

However, this year, Chapman expects an investment to be made into building new products.

In addition to scaling the number of nodes, Chapman said Northern Trust has begun to explore which new types of assets would best suit the move to a blockchain.

As part of that effort, he said the company is now engaged in conversation with more than 100 private equity clients to determine exactly what other types of products might be suitable for the platform.

He concluded:

"What we’re doing now is reviewing with other clients and other prospects the next stages of what we want to be launching in that ecosystem."

Northern Trust image via Glassdoor


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