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Leading investment banks team up to support blockchain technology

The blockchain technology is creating waves in the global financial sector. Recognising its potential to disrupt the traditional banking system, more and more finance industry giants are entering the blockchain space.

In a bid to design and deliver advanced distributed/share ledger technologies to global financial markets, nine of the world’s leading banks have come together to form a partnership with financial innovation company R3, the company said in a press release.

The group of banks includes Barclays, BBVA, Commonwealth Bank of Australia, Credit Suisse, J.P. Morgan, State Street, Royal Bank of Scotland and UBS. The project will be led by David Rutter, R3 CEO and former ICAP Electronic Broking CEO.

“This partnership signals a significant commitment by the banks to collaboratively evaluate and apply this emerging technology to the global financial system," said Rutter. “Our bank partners recognize the promise of distributed ledger technologies and their potential to transform financial market technology platforms where standards must be secure, scalable and adaptable.”

The group will work together on research, experimentation, design, and engineering to help advance state-of-the-art enterprise-scale shared ledger solutions to meet banking requirements for security, reliability, performance, scalability, and audit. The group will work within a collaborative lab environment or “sandbox” to test and validate distributed ledger prototypes and protocols.

The banks will also finance R3 with seed capital, collectively contributing “several millions of dollars”, a person familiar with the talks told FT. The funds are expected to go a forthcoming series A financing for the company.

"These new technologies could transform how financial transactions are recorded, reconciled and reported – all with additional security, lower error rates and significant cost reductions," said Hu Liang, Senior Vice President and head of Emerging Technologies at State Street. "R3 has the people and approach to drive this effort and increase the likelihood of successfully advancing the new technology in the financial industry."

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