The transaction remains subject to closing conditions and is expected to complete in the fourth quarter.

Amongst the new technology acquired by LSEG is Axoni’s Veris network, a post-trade lifecycle and reconciliation management platform for equity swaps that launched in 2020.

Veris streamlines the post-trade data reconciliation process and prevents cash flow breaks by enabling counterparties to share data associated with equity swap deals, positions, trades, and related cash flows, Axoni said.

Following the transaction, LSEG will own and operate the Veris network after a transition period.

“This acquisition represents a significant step forward in our efforts to modernise OTC derivative post-trade infrastructure,” said Greg Schvey, chief executive at Axoni.

“In recent years, we’ve partnered closely with LSEG to develop our trade processing applications and are confident they are the right party to help realise its growth potential.”

The deal follows LSEG’s acquisition of Acadia in 2022 in a bid to build out its multi-asset post-trade capabilities. Acadia provides risk management, margining and collateral services for the uncleared derivatives markets. LSEG had held a minority stake in the firm since 2018.

In the same year, the exchange group also received regulatory approval for its Quantile acquisition, also building out its post-trade division.

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The asset manager will leverage the software through an integration of its flagship Aladdin platform, with further integration plans expected later.

Axoni’s platform allows all relevant parties involved in a trade to match and confirm trade terms and synchronise on post-trade processes.

It also uses the open-source, standardised model for derivative trade processing, the ISDA Common Domain Model (CDM).

“Today’s announcement is a significant milestone and the culmination of years of collaborative industry research, design, and development,” said Mark Cox, chief operating officer of global investment operations at BlackRock.

“The Axoni platform will help us build scalability while mitigating risks in the investment life cycle beginning with equity swaps. We see great potential in a distributed ledger network for uncleared derivatives as we continue to prove out this new area of innovation.”

The development builds on an existing partnership between BlackRock and Axoni, where the latter has continued to receive support from major institutions in the last few years from the likes of Citi and Goldman Sachs.

The technology provider also raised $31 million in a funding round from new investors Deutsche Bank, UBS, and Intel Capital in February earlier this year.

“BlackRock joining the Axoni network represents an important step in the evolution of market infrastructure and is a direct result of the strategic partnership between our firms,” said Brian Steele, global head of market solutions at Goldman Sachs.

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Blockchain technology provider Axoni has raised $31 million in its latest funding round from new investors Deutsche Bank, UBS, and Intel Capital taking its total funding to $90 million.

The three new strategic investors joined an extensive list of existing investors including Citi, Goldman Sachs, HSBC, JP Morgan, Nyca Partners, and Wells Fargo, who also participated in the previous funding round.

“Axoni are proving themselves to be a market leader in providing technology solutions in a digital world,” said Natalie Horton, global head of capital markets financing at UBS. “We are excited to partner with them to drive solutions to benefit the future of our industry, such as enhancing our front-to-back client experience and delivering operational efficiencies.”

Axoni confirmed that the additional funding would be used for the expansion of the company’s networks across asset classes.

“We’re delighted to expand the list of Axoni’s strategic partners in this financing round and deeply appreciate the continued support from our existing investors,” said Grey Schvey, Axoni CEO. “Applications of Axoni’s technology have expanded rapidly in recent years; this investment provides us with the capital and partnerships to meet that demand.”

The firm’s last funding round took place in 2018, with HSBC participating in a $36 million Series B funding round alongside JP Morgan, Goldman Sachs, and Citi.

As part of the deal, HSBC said it would be working with Axoni on several initiatives to deploy its services for automation, auditability, and accessibility.

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The multi-year initiative, which Axoni said included input from 15 major buy- and sell-side firms, has produced a distributed ledger infrastructure that allows both sides of an equity swap trade to be synchronised throughout the transaction lifecycle to communicate changes with each other in real-time.

Equity swaps are generally traded directly between counterparties, with each counterparty maintaining its own books and records representing the initial trade terms and changes throughout the trade lifecycle. Axoni said data breaks between counterparties can be frequent, leading to increased operational costs to manually reconcile records against each other.

Launched in 2013, Axoni has gained major backing from large institutions for its work focused on distributed ledger technology. HSBC, JP Morgan, NEX Group, Franklin Templeton Investments, Wells Fargo, as well as Citi and Goldman Sachs, have all invested in the company in the past couple of years. 

“Goldman Sachs continues to embrace new technology solutions which enhance our front-to-back client experience and deliver operational efficiencies,” said Brian Steele, global head of market solutions at Goldman Sachs. “We are excited to be working with innovative tech companies like Axoni, and our industry partners, to develop post-trade solutions which automate business processes and synchronise data on common infrastructure.”

The participating firms also collaborated to create and implement a standardised representation of equity swaps throughout their lifecycle with initial trade confirmation, cash flows, amendments and corporate actions. 

“This is a significant milestone which reinforces our commitment to embracing technology to solve real challenges faced by the industry,” Puneet Singhvi, head of financial market infrastructure and lead for blockchain, distributed ledger technology and digital assets at Citi, added. “The platform, using smart contracts, will enable significant efficiencies while mitigating risks in post trade processing of equity swaps.”

Earlier this month, Citi made moves to centralise and automate its foreign exchange post-trade processes by expanding its partnership with shared ledger technology specialist Cobalt. Citi said it will use Cobalt’s FX infrastructure based on shared ledger and advanced technology for bilateral trading, to create a standardised record of all trades that clients can manage from a single platform.

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HSBC participated in the funding round which brings Axoni’s total funding to date to $59 million. The technology vendor said that it will use the funds to enhance its data synchronisation tools, expand its infrastructure products and broaden the network of institutions using distributed ledgers.

As part of the deal HSBC will work alongside Axoni, which was established in 2013, on several initiatives to deploy its services for automation, auditability and accessibility.

“Distributed ledger technology will clearly be important in modernising the shared infrastructure of capital markets,” Matthew Flanigan, COO of HSBC Global Banking and Markets for the Americas, commented. “Axoni has demonstrated that they are the leader in this space and HSBC is delighted to work with them on increasing efficiency and lowering costs for the industry.”

In August, Goldman Sachs led a $32 million funding round in Axoni alongside several major buy- and sell-side firms, such as JP Morgan, Citi, NEX Group, Franklin Templeton Investments and Wells Fargo.

Earlier this month, Axoni provided its distributed ledger infrastructure and smart contract applications to help a consortium of companies, including IBM and IHS Markit’s MarkitSERV, re-platform the DTCC’s credit derivatives Trade Information Warehouse on distributed ledger technology.

The DTCC has said that it plans to move towards an ‘open’ testing phase by the end of the year, where other market participants and providers will be able to test the new platform. The testing phase is expected to be completed in the first quarter next year, after which it will schedule a go-live date.  

“We are delighted to have the support of HSBC. Their unique combination of global reach and innovative drive make them a perfect addition to our strategic investor group,” Axoni’s CEO, Greg Schvey, concluded.  

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Established in 2013, Axoni’s latest funding round included participation from Andreessen Horowitz, Citi, Coatue Management, Digital Currency Group, F-Prime Capital, Franklin Templeton Investments, JP Morgan, NEX Group, Wells Fargo, and Y Combinator.

“Axoni has established itself as a market leader in enterprise blockchain, delivering solutions that can be used at scale across financial markets. We are pleased to work with them as they execute their strategy,” said Ashwin Gupta, managing director at Goldman Sachs.

The firm has so far raised $55 million in investments and will use the latest funding to enhance its data synchronisation technology, build out its suite of infrastructure products to support vital deployments of its flagship AxCore system, and expand its network of enterprises using distributed ledgers. Axoni is also planning to further development of its Ethereum-compatible smart contracting language, AxLang.

“Our strategic partners have been critical to our success so far; we are delighted to strengthen and expand those relationships with this financing as we continue to deploy Axoni’s technology,” said Greg Schvey, CEO of Axoni, of the latest round of investment.

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