Company issues blockchain investment product

Blockchain, the technology promising to usher in simplicity and transparency to finance, is entering one of the industry’s most obscure corners.

London-based Marex Solutions created what it says is the first structured product to be registered, cleared and settled using the distributed ledger technology underpinning bitcoin.

The two-month pound-denominated notes pay a coupon of up to 13 percent per year based on the performance of the FTSE 100 Index, according to a term sheet. Marex declined to say how much was sold to retail investors in the private placement on Friday.

Frequently lambasted by regulators for confusing terms, high fees and pushy sales practices by distributors, the structured product industry would seem ripe for the kind of disruption promised by blockchain.

Scores of institutions — including Wall Street’s biggest banks — are racing to develop distributed ledger technology to simplify the way securities are traded, settled and recorded.

“It’s allowed us to tackle a product that was previously the exclusive domain of a handful of investment banks and global custodians,” said Nilesh Jethwa, chief executive of Marex Solutions, a division of Marex Spectron Group, in an interview. “For the first time, a bunch of guys who are niche specialists in their area can work together to create something which isn’t just as good as the investment banks are producing, but actually superior.”

The structured product industry is one that could use a shake-up. Global year-todate issuance led by JPMorgan Chase fell 2 percent from last year to $25.4 billion, according to Bloomberg data.

With regulatory changes such