Business coup for Guernsey with first use of blockchain

It follows the announcement yesterday that fund administrator Northern Trust was to use its local office to launch the first commercial deployment of blockchain technology for the private equity market.

The States has been working with the company for the past six months to enable the market-leading opportunity and it is hoped that the local infrastructure, which impressed senior figures at the US wealth manager, will put the island at the forefront of further developments.

'They could have chosen anywhere in the world to introduce this product but they chose Guernsey because they felt it was by far the best place to do this business,' said Economic Development Committee president Peter Ferbrache.

He confirmed that this was the business development he had said would 'sensationalise the island' at the Awards for Achievement ceremony two weeks ago.

'This is the first of its type and the idea is when people know that can be done from here we should attract other businesses of similar ilk to Guernsey.

'For Guernsey to be home to the first commercial venture of its kind in the world is not only very exciting, but is also a testament to the sort of high value innovation government wants to encourage, to help drive economic growth and economic diversification.'

The island scored highly with Northern Trust not just because of the commitment shown by government, but particularly its record and capability on connectivity, cyber security, data sovereignty, innovation, and the proactive approach shown by the Guernsey Financial Services Commission, which worked with the States in enabling the proper levels of regulation.

Northern Trust also said yesterday that the development would 'transform' private equity administration. Alongside the island's established track record for private equity fund structures and administration over the past 30-plus years, it is hoped that Guernsey will now see first-mover advantage and continue to be able to demonstrate expertise in this area.

'If this is to become a new era for private equity, then we need to be part of that new era,' said Colin Vaudin, the States chief information officer, who led the negotiations with Northern Trust. We are right for now and need to continue to be right for the future.'

Increased take up of blockchain administration could have implications in the future for local back office jobs in fund administration, one of Guernsey's largest sectors of finance industry employment, in the future, senior States figures admitted yesterday.

'The world changes and you cannot necessarily expect that the job market will stay as it is. I hope that it will lead to higher-paid, better value jobs in Guernsey, and over the long term if some jobs are lost, others are gained,' said Deputy Ferbrache.

Northern Trust has had a presence in Guernsey since 1972 and worked with the US multinational technology company IBM in developing the software, which will enable the fund to be managed, serviced and audited on a transparent platform by participants, who gain access via secured means.

It will initially be used for the administration of a private equity fund managed by Unigestion, a Geneva, Switzerland-based asset manager with $20bn in assets under management.

'Northern Trust anticipates substantial opportunities to bring improvements to the private equity market by using blockchain technology,' said Justin Chapman, global head of market advocacy and research at Northern Trust.

'This is an important first step to connecting participants much more effectively, including investors, managers, administrators, regulators, advisors and auditors.

Northern Trust has been consistently benchmarked as the largest administrator locally of Guernsey-domiciled and non-domiciled funds.