Northern Trust (Nasdaq: NTRS) has pioneered the capability to deploy
legal clauses as smart contracts directly from a digital legal agreement
onto its private equity blockchain. The industry-first technology
application on a blockchain can be deployed to other platforms, with
potential for broad use in generating digital documents and applying
conditions beyond legal agreements.
Northern Trust’s application has leveraged advanced software developed
by legal-technology startup Avvoka which enables participants to
negotiate, review and digitally sign legal agreements. This new
capability was deployed for Emerald Technology Ventures, a venture
capital firm with funds administered on Northern Trust’s blockchain in
Guernsey. Northern Trust worked with law firms Carey Olsen, representing
Emerald, and Allen & Overy, representing investors in the Emerald
Industrial Innovation Fund, to digitally generate and agree to Limited
Partnership Agreement side letters containing legally binding clauses.
“As financial markets move towards digital processes, Northern Trust
will continue to drive the technology innovation that will redefine our
industry,” said Pete Cherecwich, president of Corporate & Institutional
Services at Northern Trust. “The collaboration and innovation that led
to this further breakthrough in blockchain technology is a testament to
all parties involved. The ability to leverage digital documents that
include smart contract code across multiple platforms is a very
significant step toward the future digital environment of securities
Northern Trust launched the first commercial blockchain solution for
private equity fund administration in 2017 and was awarded four U.S.
patents in 2018 for processes critical to the move from manual to
digital operations in private equity. Northern Trust also collaborated
with major audit firms to enable real-time auditing of private equity
lifecycle events on the blockchain.
Key to the latest enhancement is the ability to embed code in a legal
agreement which is applied to the blockchain and persists through the
lifecycle of the investment. The development neatly coincides with the
recent approval in Guernsey of an amendment to existing law validating
the legal effect of such smart contracts.
Hans Dellenbach, Partner and CFO at Emerald Technology Ventures, said:
“We see digital contract collaboration platforms growing in use and are
excited that Northern Trust have developed this advanced technology
capable of delivering smart contracts directly to its Guernsey-based
private equity blockchain. This is a very significant development for
Tom Carey, Partner at Carey Olsen in Guernsey, said: “The technology
developed by Northern Trust will not only speed up the contract
negotiation process but will also allow for a much greater automation
and transparency of the fund’s legal and contractual requirements.
Guernsey’s recent statutory validation of smart contracts and its
expertise in private equity shows that it is the jurisdiction of choice
now and for the future of fund administration.”
Matt Huggett at Allen & Overy LLP’s Funds and Asset Management group in
London, said “Avvoka are part of our FUSE tech innovation space and we
are pleased to see the output of this program streamlining contract
negotiation when boarding investors into funds.”
About Northern Trust
Northern Trust Corporation (Nasdaq: NTRS) is a leading provider of
wealth management, asset servicing, asset management and banking to
corporations, institutions, affluent families and individuals. Founded
in Chicago in 1889, Northern Trust has a global presence with offices in
20 U.S. states and Washington, D.C., and across 23 locations in Canada,
Europe, the Middle East and the Asia-Pacific region. As of December 31,
2018, Northern Trust had assets under custody/administration of US$10.1
trillion, and assets under management of US$1.0 trillion. For more than
125 years, Northern Trust has earned distinction as an industry leader
for exceptional service, financial expertise, integrity and innovation.
or follow us on Twitter @NorthernTrust.
Northern Trust Corporation, Head Office: 50 South La Salle Street,
Chicago, Illinois 60603 U.S.A., incorporated with limited liability in
the U.S. Global legal and regulatory information can be found at http://www.northerntrust.com/disclosures.