Delta Capita acquires SETL Capital Markets, unveils DLT division – Ledger Insights

Today, capital markets services provider Delta Capita announced the launch of its new Distributed Ledger Services venture and the acquisition of the capital markets division of blockchain firm SETL. The first project is to work on a blockchain-based Central Securities Depository (CSD) for Montis, a subsidiary of digital asset exchange Archax, which is supported by abdn. Montis also takes a minority stake in the Delta Capita venture.

During the transition from legacy to tokenized infrastructures, CSDs are a critical interoperability point between new and legacy infrastructure and different blockchains. Montis CSD aims for a launch in Q4 2023 and aims to support multiple blockchains with permission to settle debt and equity digital securities.

“The tokenization of digital securities is at an inflection point and Montis embraces this new paradigm shift in the capital markets,” said Montis CEO Martin Watkins. “Montis establishes the DLT-based infrastructure required to support the settlement of MiFID-compliant native and non-native digital securities tokens alongside conventional securities.”

SETL’s extended reach

From SETL’s perspective, it sees the deal with Delta Capita as a route to commercialize existing intellectual property (IP) “given Delta’s global presence and capital markets specialization,” SETL’s Anthony Culligan said.

The IP is jointly owned, so it does not preclude SETL from marketing to its own capital markets clients. If Delta licenses the software, its own subsidiary will receive the license fees. “Both SETL and Delta are free to develop the software and market to their respective capital markets clients subject to these arrangements,” Culligan told Ledger Insights via email.

SETL has its own core permissioned blockchain technology as well as an interoperability solution PORTL. Along with fellow blockchain firm Digital Asset, it has been a key technology provider for the Regulated Liability Network (RLN), a major initiative to integrate digital currencies of commercial banks and central banks into a common network. The RLN work is not part of the Delta agreement.

This transaction l has several advantages for SETL. It brings in cash and helps expand SETL’s use in the capital markets. It also helps to consolidate its position in RLN when one or two people have questioned whether RLN should be DLT-based.

SETL originally developed two capital market solutions, one a CSD (ID2S) and the other a fund trading platform IZNES. The CSD solution for commercial papers was launched by Orange and Citi with several French banks as participants, but did not gain traction and was closed.

Meanwhile, IZNES is the successful French investment fund trading platform that SETL originally developed. However, IZNES switched blockchain technology from SETL to Hyperledger Fabric last year, citing a desire to use open source technology. While SETL has open sourced much of its code, it is very much tied to the firm, which was unexpectedly acquired by Turkish firm Colendi last year before the IZNES switch.