[The Institute for Innovation Development interview series invites innovation experts, innovative business leaders and emerging FinTech companies to talk to our readers about their latest innovation activities. The series seeks to learn from innovative business creators, uncover innovation best practices, and apply these insights into a financial services business model.
We recently talked with Jordan Fishfeld, Managing Director and CEO of CFX Markets, an online trading platform for non-public investments - currently focusing on non-traded REITS - that is transforming how people view and hold alternative asset positions.]
Hortz: What was involved in creating a first time trading platform, in this case, for illiquid REIT and BDC positions? What were your first steps?
Fishfeld: Our first step was learning the process of how these assets transferred historically. As exchange technologists, we could build the infrastructure to actually make these trades possible. We then built a very robust, fully automated system, and quickly realized we needed to simplify things.
I think the sentiment of everyone these days is digital - online is better. All of the users were very quick to adopt our technology, but they had no incentive to build it. We realized this early and so rather than going against the large players, we worked with them and created the tech layer for all parties to transact.
Hortz: What do you mean when you characterize your innovation as an “end-to-end” financial trading platform?
Fishfeld: We brought the entire transfer process online. A seller can now list his or her asset, match a buyer, and receive distributions all within the platform. Through our integrations, we are able to cut the settlement time down significantly, creating a more efficient liquidity solution.
Hortz: What new processes have you created that were not deployed previously in the alternative asset trading or exchange markets? What additional benefits do they bring?
Fishfeld: As an alternative asset trading platform, our application of blockchain (distributed ledger technology) is largely focused on the reporting, recordkeeping, and clearing & settlement process. We are not a blockchain company. We are a blockchain enabled company that leverages distributed ledger applications in a way that allows us to standardize alternative assets and the process for transferring ownership from one party to another.
The first phase involves using Ethereum to store transaction data to provide an immutable record of our trades. We are required to report all trades to FINRA and are regularly audited on our broker-dealer activities. By leveraging Ethereum we can provide secure authenticated reports to FINRA in real-time which will replace the time-consuming audit process, as well as resolve any dispute issues that may come up downstream. Databases can be altered, and documents can be backdated, but the blockchain serves as a permanent paper trail.