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Payment identity verifier iSignthis (ASX: ISX) may have an acrimonious relationship with the ASX, but its ties to another Australian bourse could not be friendlier.
Now almost five months into a share trading suspension and the subsequent launch of legal proceedings against the ASX, iSignthis will offer its expertise to a much smaller rival to implement same-day settlements on trades.
iSignthis has taken a strategic investment in the National Stock Exchange of Australia (NSX), acquiring a 12.96 per cent stake via a $4.2 million private placement.
If NSX shareholders grant their blessings, the exchange will raise a further $3.8-5.8 million of which iSignthis will have the option to subscribe in order to lift total holdings to 19.9 per cent.
These transactions are in parallel to a new joint venture between the two parties called ClearPay, an investment vehicle aimed at developing a Delivery versus Payment (DvP) platform to replace current process.
The multicurrency, real-time platform is expected to allow same-day settlements on the NSX's subsidiary National Stock Exchange of Australia (NSXA), the NSX's wholly owned subsidiary market operator.
NSX will initially own 41 per cent in ClearPay whilst iSignthis contributes intellectual property as well as design and development via its subsidiary Probanx Solutions.
The move will integrate the NSXA into iSignthis' ISXPay and Paydentity platforms, with NSX then having the option to lift its stake in the joint venture to 50 per cent.
"It's very exciting for us that the ClearPay JV will bring genuine competition to the Australian cash equities eco-system," says ISX managing director and CEO John Karantzis (pictured), who will act as ClearPay's CEO during the software development stage.
"We are delighted to be a strategic shareholder in the NSX, which operates NSXA, Australia's second-largest Tier 1 market operator.
"With this investment and iSignthis' technology platforms, we have the capability to develop an Australian version of Nasdaq, and become a competitive alternative to the ASX."
The NSX currently has 67 listed entities of which 53 are listed as based in Australia. Its top 10 companies have a combined market capitalisation of around $1.7 billion, roughly the equivalent of the ASX's 157th largest company Corporate Travel Management (ASX: CTD).
NSX acting CEO Thomas Price says the deal allows the exchange to expedite plans to transform its licenced exchange market within a cost-efficient framework.
"The introduction of an already experienced provider of RegTech and payments systems is very satisfying for us as it allows an accelerated build process," says Price.
"Market commentators are in broad agreement that cash equity exchanges are facing a global technology revolution which is challenging legacy methods of clearing and settlement.
"Having patiently monitored the development of the appropriate technology and know how we consider that this is the right time for the NSX to act."
"More exciting is that it creates a solid foundation for the NSXA to be a true independent first-class venue of choice for companies seeking to be serviced via the most advanced infrastructure and distribution in their goal of attracting investors from both here and abroad," says Price.
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