ICE and tZERO collaborate on tokenised securities platform

Intercontinental Exchange (ICE), the parent company of the New York Stock Exchange, and tZERO Group are partnering to develop infrastructure for a new platform for tokenised securities. ICE is also investing in tZERO’s latest funding round and in return will receive a licence to tZERO’s blockchain patent portfolio, which comprises 23 patent families and 103 patents.

In brief:

• ICE and tZERO sign a letter of intent to collaborate on a NYSE-affiliated platform for tokenised securities.
• ICE invests in tZERO and receives a licence to tZERO’s blockchain patent portfolio.
• The parties are also exploring the use of tZERO’s tokenised assets for collateral management within ICE clearing houses.

Letter of intent designates tZERO as design partner

According to the official announcement on the tZERO website, the letter of intent stipulates that tZERO will act as lead design partner for digital transfer agent and broker-dealer infrastructure. That infrastructure is intended to enable the settlement of securities transactions on the blockchain via ICE’s so-called Digital Trading Platform.

If the collaboration meets the required regulatory, technological and operational conditions, tZERO is expected to be designated as a recognised digital transfer agent on that platform. ICE also wants to work with tZERO to establish standards for digital transfer agents, tokenisation agents and broker-dealers operating on the platform.

Patent portfolio and investment part of the deal

tZERO’s blockchain patent portfolio covers, among other things, compliance-aware transfer logic, customisable smart contract frameworks and identity interoperability at broker-dealer level. Through its investment in the funding round, ICE will receive a licence to this portfolio for use within the Digital Trading Platform and potentially other applications.

Michael Blaugrund, Vice President of Strategic Initiatives at ICE, says tZERO’s experience with regulated on-chain infrastructure makes it a valuable partner for expanding the digital transfer agent programme. Alan Konevsky, Chairman and CEO of tZERO, calls the move towards public equities a logical extension of the platform the company has built over the past few years.

Collateral management as next step

In addition to the infrastructure collaboration, the two parties are exploring whether tZERO’s tokenised assets can be used for collateral management at ICE’s clearing houses and affiliated organisations. This would mean further integration of blockchain-based securities into traditional financial infrastructure.

The collaboration fits into a broader trend of large financial institutions using blockchain technology for securities markets. The European Central Bank is also exploring the use of blockchain for central bank money.