Industry person of the year
North America
Kelly Mathieson, Digital Asset
A catalyst for change
Digital Asset made waves at Global Custodian’s Industry Leaders Awards event in New
York as Kelly Mathieson, head of financial products, took home the coveted North America
Industry Person of the Year award. We speak to Kelly on how industry attitudes have
shifted around blockchain technology and its potential for clearing and settlement.
GC: Congratulations on your award! Being part of the first tech-
nology firm to win the IPOTY award, is that a reflection of the
industry trend that non-banks are playing an increasing role in
securities services?
KM: Winning IPOTY is a great honour, and doing so as part of
Digital Asset highlights the evolution we’re seeing in how secu-
rities services are defined and provided. We are dealing with a
securities services environment where revenues are lower than
they have been in prior years, interest rates and spreads are still
low, and volatility comes in a series of painful fits and starts. At
the same time, there is rampant competition, not only from es-
tablished providers looking to improve margins, but increasingly
more from new-comers who are often unregulated and defi-
nitely not structured the same way as conventional securities
services providers.
The result is the emergence of many non-traditional provid-
ers who enjoy an unlevel playing field. As a consequence, both
new providers and the incumbents are turning to emerging
technologies - including DLT (distributed ledger technology)
- to improve their competitive stance and delight their clients
with solutions that transform operating models and create the
foundation for products and services that would have previously
been impractical or impossible to consider.
GC: What is the catalyst driving DLT adoption for clearing and
settlement workflow?
KM: It’s the opportunity to automate workflow between mul-
tiple parties - such as buyers and sellers of an asset and their
brokers, custodians, and their cash banks - using a shared ledger
that all of these parties can interact with and utilise with the
confidence that the data retained by the ledger is consistently
and reliably in sync, fully reconciled, and only accessible via
predefined permissions.
This is possible because the data is never siloed, separated
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Global Custodian
Spring 2019
or segregated. It isn’t duplicated across the parties’ operations
areas, and thus is not prone to separate interpretation and use. It
is a single golden source of data that accurately and immutably
represents what was done by the parties to a transaction.
Critically, the workflows are mutualised, reducing cost and
risk. Workflow is also automated because the rights and obliga-
tions of each party are defined, known, examinable and consist-
ent with legal agreements. Actions are certain to be performed
exactly as the parties have defined using smart contracts.
When applied to clearing and settlement workflows - where
multiple parties have different and changing rights and obli-
gations across the lifecycle of a transaction, and where current
processes are unnecessarily duplicative and error prone - the
advantages DLT presents are significant.
GC: What is the end-goal from a clearing and settlement perspec-
tive? Is it about having a completely digital environment?
KM: I think the aim would be to get to an environment where
market infrastructures that facilitates the transfer of assets - or
the transfer of value - is supported by technology that enables
counterparties to come together in a structure that is more
transparent, less hindered by batch processing and time-zones,
and less heavily reliant on commoditised services of middle- and
back-offices.
While I don't know if we’ll see a future where every asset is
digital, the end goal of a more advanced infrastructure is the
same. Data is the key - data powers everything in the connected
economy. Increasingly, firms are reorienting their strategies
around digital transformations that speak to the imperatives
of enhanced customer experience, process simplification, cost
reduction, speed and accuracy—all of which has to have a foun-
dation of accurate underlying data. If you’re spending the bulk
of your time disagreeing with a counterparty about the accuracy
of the transaction record to which you are both party and which,