CentotrentaIBM and Centotrenta Servicing have announced the HyperMast STS platform. This aims to offer an end to end credit securitisation management platform based on IBM blockchain technology.

In support of this initiative, BNP Paribas Securities Services has joined the HyperMast STS platform. Its objective is to simplify and standardise securitisations.

Centotrenta

Centotrenta Servicing is an Italian financial services company. It manages approximately 200 securitisation transactions a year in Italy with a most recent combined value of >15B euros (at the end of  November, 2019). It performs ‘master servicing’ activities, thereby  representing a guarantee role in structured finance transactions. This guarantee function is effectively exercisable without conflict of interest, since none of the Centotrenta Group companies carries out collection and/or investment activities in markets.

As a servicer, Centotrenta Servicing is responsible for:

  • servicing the portfolio
  • collecting the receivables
  • providing cash and payment services
  • monitoring the compliance of each securitization transaction with applicable laws (and the issuing prospectus).

To improve its services, Centrotrenta and IBM have produced a design for the HyperMast STS platform which they believe addresses the financial sector requirements for clients, including:

  • data quality
  • process security
  • flow traceability
  • reduced processing times and paper-based processes.

Starting in February 2020, the HyperMast STS platform project will enter ‘a phase of industrialisation’. In this phase there will be activities to seek and encourage additional network participants, including ones drawn from:

  • paying agents
  • originators
  • servicers
  • intermediaries
  • credit institutions
  • investors
  • law firms
  • technology companies.

The HyperMast STS platform

The HyperMast STS platform aim is to provide financial markets with a tool to connect the entire ecosystem (made up of originators, servicers, intermediaries, credit institutions, investors, etc.). This will enable participants to interact in the different phases of each securitisation operation in a transparent, secure and traceable way.

The platform will address the core processes in securitisation operations, such as:

  • forming and signing the initial contracts (block sale)
  • the contracts underlying the securities issuance activities (block issue)
  • the definition of a ‘smart contract’.

Based on blockchain – or Distributed Ledger Technology (DLT), HyperMast STS will offer advantages for the stakeholders of the operations, by providing greater:

  • levels of interaction between
  • sharing of processes
  • confidence in the processes
  • degrees of guarantee (of the financial assets).

The choice of the IBM Blockchain Platform, according to Centrotrenta, is attributable to the platform’s:

  • robustness and reliability
  • capabilities when creating DLT permissioned environments
  • ability to combine efficiency with operational versatility within a hybrid cloud model
  • data privacy control.

The prototype completed in November 2019 and addressed several specific issues, including:

  • ways to interface with the Bank of Italy systems (Infostat, FE129)
  • security and user profiling
  • data protection management
  • digital signature mechanisms.

The latter are significant because these permit the various actors, according to their role, in a securitisation to:

  • sign the HyperMast STS platform regulations
  • perform onboarding.

Enterprise Times: what does this mean

Since its Bank of Italy authorisation to operate, Centotrenta Servicing has completed over 1,000 portfolio purchases. Its managed portfolios contain a broad range of:

  • performing and non-performing loans
  • leases
  • residential and commercial mortgages
  • consumer credit
  • trade receivables
  • receivables from the Public Administration
  • other assets.

From an external perspective, the Centotrenta adoption of blockchain makes sense. With relatively few ‘securitisations’ (200) which possess extensive supporting detail/documentation and dozens (if not hundreds) of interested parties, a common immutable blockchain-based access point has multiple attractions. Adding to this is the lack of need for throughput performance (still one of the weakest elements of blockchain technology), given the low number of securitisations. In this it is not dissimilar to a  blockchain for a supply chain (q.v. Marco Polo).

Though clearly Italian-market-oriented, the success, or otherwise, of the IBM/Centotrenta HyperMast STS platform could be a useful reference point for enterprises. It brings together many aspects which ‘ordinary businesses’ will likely vale in any blockchain implementations.

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