According to Reuters, Paxos applied for this license after a successful pilot test of same-day trading settlements. The Switzerland-based investment bank Credit Suisse and equity trading arm of Nomura Holdings, Instinet, also took part in the pilot project. A Paxos representative stated that these companies settled same-day US-listed stock trades using Paxos’ settlement service. These trades were the first live application of blockchain technology for United States equities markets.
The pilot test is calling to shorten the time it takes to settle a trade, which is usually approximately two days. In February 2021, the Depository Trust and Clearing Corporation (DTCC) announced that reducing settlement time to one day would reduce market risk and lower margin requirements. Paxos aims to secure clearing agency registration in 2021, so the company can act as an intermediary to facilitate proper trade settlements between sellers and buyers.
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