Northern Trust in collaboration with IBM and other key
stakeholders, has launched the first commercial deployment of
blockchain technology for the private equity market.
Together they have built a security-rich blockchain, or
distributed ledger solution, based on the open source Hyperledger
Fabric. It is now being used for the management and administration
of a private equity fund by Unigestion, a Geneva, Switzerland-based
asset manager with $20 billion in assets under management.
The group has opted for a Guernsey-based fund because the use of
blockchain has already been approved by the Guernsey authorities.
Northern Trust has offered a wide range of financial services from
the island since 1972. "Guernsey has been at the forefront of
innovation in the financial industry for many years," said
Guernsey's Chief Minister, Deputy Gavin St Pier.
"As a jurisdiction we continually monitor new technologies,
support businesses in developing ground-breaking new ideas and
provide a supportive environment where products can not only
flourish but be first-to-market. The fact that this pioneering
solution to the private equity market has been domiciled in
Guernsey, and that Northern Trust has collaborated with IBM to
provide a secured cloud solution with a high level of cryptography
to protect investor data, shows the commitment of Government to
being at the cutting edge of financial services
The blockchain network provides real-time insight and
transparency to all parties, including the fund managers and
investors as well as allowing regulatory access when required.
Importantly, the blockchain network has been designed to support
compliance with current, local regulations.
"Northern Trust has engaged with us as regulators from the
start and we are pleased with the level of openness and
interaction. This is another example of the Commission's
approach to innovation in the Bailiwick's financial services
industry," said Emma Bailey, Director of the Investment
Supervision and Policy Division at the Guernsey Financial Services
The blockchain solution allows the fund to transfer ownership
stakes and be managed, serviced and audited throughout the
investment lifecycle on a transparent platform offering 'one
version of the truth' to participants who gain access via
secured means. Initially, Northern Trust will make the solution
available to clients on a selective basis.
"Current legal and administrative processes that support
private equity are time consuming and expensive," said Peter
Cherecwich, President of Corporate & Institutional Services at
"A lack of transparency and efficient market practices
leads to lengthy, duplicative and fragmented investment and
administration processes. Northern Trust's solution is designed
to deliver a significantly enhanced and efficient approach to
private equity administration."
"Blockchain is an ideal technology to bring innovation to
the private equity market, allowing Northern Trust to improve
traditional business processes at each stage to deliver greater
transparency and efficiency," said Arvind Krishna, Senior Vice
President of Hybrid Cloud and Director of IBM Research.
Justin Chapman, Global Head of Market Advocacy and Research at
Northern Trust, said the business anticipated substantial
opportunities to bring improvements to the private equity market by
using blockchain technology.
"This is an important first step to connecting participants
much more effectively, including investors, managers,
administrators, regulators, advisors and auditors," said Mr
Key stakeholder, General Partner Board, praised the development:
"By utilizing blockchain technology, Northern Trust has
provided us with an infrastructure which will enable the fund to be
serviced in a digital environment, introducing a new collaborative
ecosystem to the private equity market where all actions are
undertaken on a common, open and transparent platform. It is
exciting to be at the forefront of this new development for private
The solution is based on the open source Linux Foundation
Hyperledger Fabric. Northern Trust is also using IBM
Blockchain's high security business network with its hardware
assisted cryptography and key management to enhance the safety and
scalability of these transactions on the IBM Cloud for cloud-based
Northern Trust invests in cutting-edge technologies and
thoughtfully considers collaborations to create exceptional
experiences, deliver leading capabilities and provide advanced
protection. The company will explore expanding the new solution
into other asset classes and jurisdictions based on success in its
When Walkers was launched as an offshore law firm in 1964 in the Cayman Islands it is fair to assume that the founders would never have dreamt their creation would, fifty years later, be working in a cross-border restructuring market driven by China.
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