Bank of America – ranked 2nd regarding top-tier banking entities in the US – is reportedly looking to utilize blockchain features for bringing down stock trades settlement time, from days to minutes. 

Specifically revealed by Bloomberg, its latest collaboration has made Bank of America a part of Paxos Settlement Service – a blockchain-enabled platform that can carry out settlement of stock trades within 24 hours. 

Kevin McCarthy, head of financing and clearing at the Bank of America, reportedly disclosed that the bank has been executing internal transactions throughout the last months, and would roll out the function to Bank of America customers, as soon as it receives the go-ahead to operate as a clearing agency.

The initiative would reportedly allow the entity to offer a “more flexible and speedier” stock settlement solution, in comparison with the similar system provided by the Depository Trust & Clearing Corporation (DTCC), where Bank of America is a direct participant.

The DTCC settlement time is approximately 48 hours, while Paxos’ service has the power to finalize the same process in a matter of minutes. 

“We can determine the settlement cycle down to T+0,” said McCarthy. “We then can free up the collateral we’d have to post on an overnight basis. […] The return-on-assets in this business would improve, which has been a challenge.”

Paxos officially rolled out its settlement offerings dedicated to equity trades two years ago, following the acquisition of the no-action relief from the U.S. Securities and Exchange Commission. 

Credit Suisse, a financial entity from Zurich, and Instinet, the trading division of Nomura Holdings, both reportedly took part in the trial phase, settling U.S.-listed stock trades on the same day.