Delta Capita buys capital markets wing of blockchain firm SETL

17 May 2023 Consultancy.uk 3 min. read

Delta Capita has acquired the Capital Markets business of SETL, helping bolster its digital capital markets ecosystem offering. The new Delta Capital Distributed Ledger Services wing this has created has also welcomed a key anchor client following the move, in the form of capital markets infrastructure firm Montis.

After a decade of individualised digitalisation, a significant proportion of technology infrastructure in the financial sector has become bespoke to each bank – even when it delivers no competitive advantage to do so. In the future, this is likely to see banks consolidate to a single service provider for general capabilities – one service, many clients. This means professional services firms are currently in a race to present themselves as a potential service provider in this capacity.

Delta Capita’s core customer base is broker-dealers, sub-custodians and global custodians. As such, it is very much engaged in this arms-race – part of which is seeing it look to boost its distributed leger technology (DLT) offering. The consultancy has acquired SETL Capital Markets – its DLT wing – to that end.

Delta Capita buys capital markets wing of blockchain firm SETL

Founded in 2015, SETL is an initiative to deploy an institutional payment and settlements infrastructure, based on blockchain technology. The organisation builds blockchain-based solutions for financial markets, asset management and payments, with its core technology being proprietary mechanisms maintain a distributed ledger of ownership and transaction records, simplifying the process of matching, settlement, custody, registration and transaction reporting. This enables market participants to move cash and assets directly between each other.

If Delta licenses the software, its own subsidiary will receive the license fees from DLT clients. However, Delta Capita’s alliance with SETL’s DLT wing also has several benefits from SETL’s perspective. It brings in cash and helps expand SETL’s usage in capital markets.

This provides a route to commercialise existing IP “given Delta’s global presence and specialisation in capital markets,” according to SETL’s Anthony Culligan. He also told market news site Ledger Insights that both SETL and Delta would be “free to develop the software and to market to their respective capital markets clients subject to these arrangements.”

Montis

Both sides believe the deal enables each firm to make an incredible impact on the capital markets, and it has already seen Delta Capita acquire an anchor client, in digital ecosystem firm Montis. Targeting a go-live date toward the end of 2024, Montis has signed up Delta Capita Distributed Ledger Services to provide the SETL technology and software development of core CSD services for debt and equity products, incorporating innovative blockchains, as well as enhancing Archax Exchange and SWIFT connectivity, among other goals. As part of this deal Montis Group will also take a minority stake in Delta Capita Distributed Ledger Services.

Joe Channer, CEO, Delta Capita, added, “Delta Capita is a specialist provider of services across the capital markets value chain. We are delighted to acquire SETL’s Capital Markets business and to be partnering with Montis to help them realise our shared vision for asset tokenisation. Delta Capita Distributed Ledger Services represents our strategic intent to be at the heart of this next exciting chapter of capital markets and technology innovation.”

Recent research found that blockchain investment is now a high priority among more than nine-in-ten decision-makers in the financial industry. However, security and privacy concerns still linger for the majority of market leaders.