Approved as a central securities depository (CSD) on October 2, 2018, by the Autorité des marchés financiers (the French financial market authority), ID2S has finally abandoned its ambitions in the field of securities services.

The new player had voted for its early dissolution on September 30, 2021, and had requested the withdrawal of its approval from the AMF. This withdrawal was confirmed by the regulator on March 29th of this year.

 

A promising technology

The company promised a real-time settlement system for money market instruments, with the help of its strategic partner Now CP. Similarly, it aimed to offer innovative issuance services as well as a trading platform.

According to its CEO, Andrea Tranquillini, the use of a “proprietary” blockchain without mining would have enabled better efficiency, resilience, transparency, and performance in terms of settlement and delivery of financial securities.

 

A complex technology

The reversal by ID2S shareholders, Orange S.A. and Citicorp North America Inc., highlights the challenges of gaining acceptance from market participants for the proposed solution. The system was essentially based on a partnership between NowCP (Trading) and ID2S (Settlement), and relied particularly on technology developed by Orange Business Services.

While market agents were convinced by the platform for post-trade, they still had reservations about the trading part. Concerns also centered on the lack of backward compatibility with Euroclear, the historical central securities depository for negotiable debt securities (NDS). At the launch of the solution, a security acquired through the solution could not be resold to a non-member of the platform.

 

The future of real-time settlement

The abandonment of the project for a technological platform using a proprietary distributed blockchain will hinder hopes for ultra-fast transaction settlement. For now, most financial securities bought and sold on the financial markets are settled on T+2, meaning two days after trading.

Post-trade actors will therefore have to wait before finding a miraculous solution in their field, especially as the regulatory environment becomes increasingly burdensome (EMIR, SFTR, CSDR...).