Firm Seeks to Digitise Australia’s Money Markets

Imperium Markets has joined Australia’s Digital Finance Co-Operative Research Centre (DFCRC), it says, to advance Australia’s first pilot and accelerate the digital transition of wholesale money and debt capital markets.

The firm adds the pilot will include testing of multiple digital currency settlement options using distributed ledger technology (DLT). It will commence in Q1 2023 and run for 12 months. It will use Imperium’s existing Amazon Web Services cloud-based digital marketplace, and the firm’s global partner R3 Corda’s DLT. The partnership with DFCRC will also fund academic researchers to produce a whitepaper on the pilot findings, which will be peer reviewed and published in financial journals.

Although it calls itself a regtech firm, Imperium Markets has operated a wholesale market for deposits and bonds for five years, it has a Tier 2 Markets Licence from the Australian Securities & Investment Commission (ASIC). It says that while other markets have transitioned to electronic trading, money and debt capital markets remain largely analogue, relying on spreadsheets, phone calls and emails – and settlements that take two-to-three days to reconcile.

Imperium Markets chairman, Rod Lewis, says the pilot is a chance for both the market and regulators to explore the efficiencies of a digital market using Imperium’s live marketplace and settlement sandbox. “Distributed Ledger is the biggest advancement we’ve seen in markets in a generation,” he argues. “Tokenised assets, atomic settlement and custody on ledger will change markets forever. Money markets and debt capital markets are vital to the economy, but in their current analogue state, they will never reach full potential. The time and costs associated with transactions are a barrier for growth.

“We need to lift the sense of urgency on digital adoption within Australia so our nation does not fall behind what’s occurring in global markets,” Lewis adds.

DFCRC CEO, Dr Andreas Furche, says the pilot will measure inefficiencies and identify risks that currently exist in the market, while demonstrating all the benefits of digital technology. “Specifically, the pilot will aim to demonstrate to the market, and to regulators, the improved liquidity, transparency and efficiency created when markets adopt digital assets,” he explains.

Imperium says the pilot will provide real-time market data to the participants and to regulators, whilst providing a cybersecure marketplace. It will also demonstrate the removal of settlement risk and counterparty risk through atomic settlement.

“We believe that the digital transition of regulated markets is inevitable,” says Furche. “It will lead to market-based solutions for large scale transactional processes that are still conducted inefficiently.

“The ability for digitised assets to be instantly exchanged and settled, allows for transaction processing with no systemic or counterparty risks,” he continues. “This is truly transformational, and Imperium Markets’ pilot is a great case study for these developments.”