As more financial services firms look for ways to utilise blockchain technology within their infrastructures, Galen Stops examines whether the technology is really as safe as advocates claim, following two high-profile hacks earlier this year.
“Cyber and system security is one of the most important issues facing markets today in terms of integrity and financial stability,” said Commissioner Christopher Giancarlo of the Commodity Futures Trading Commission (CFTC) on September 8, when approving system safeguard requirements for derivatives clearing organisations.
Giancarlo is hardly alone in his concerns.
Calypso Technology has become the first firm to partner with R3 to develop capital markets applications on its Corda distributed ledger-based smart contract platform.
The two firms are currently developing a multi-party trade confirmation solution and testing it with multiple financial institutions.
R3’s Corda – which will be open-sourced globally on November 30 – is designed to be an open and inclusive smart contract platform that enables third party providers and partners to build and operate distributed ledger applications using common code and protocols to ensure interoperability.
Franck Mikulecz, managing director of FXCH, talks to Galen Stops, deputy editor of Profit & Loss, about how blockchain technology can help mitigate some of the credit challenges facing the FX industry.
With blockchain, or distributed ledger technology, still being so new to financial services, Mikulecz claims that banks are still trying to figure out the most effective way to deploy this technology.
“I can see a lot of banks have an interest because they know that the market will evolve and the market will potentially be disrupted by the technology but they don’t really know how it’s going to happen and they don’t really know how to use it themselves.
The Depository Trust & Clearing Corporation (DTCC) has selected IBM, in partnership with Axoni and R3, to provide a distributed ledger technology (DLT) framework for derivatives post-trade lifecycle events.
The firms will work collaboratively to re-platform DTCC’s Trade Information Warehouse (TIW), building a derivatives distributed ledger solution for post-trade processing based on existing TIW capabilities and interfaces with technology providers and market participants.
The TIW service currently automates the record keeping, lifecycle events, and payment management for more than $11 trillion of cleared and bilateral credit derivatives.
OTC Exchange Network (OTCXN) has joined the The Wall Street Blockchain Alliance (WSBA) as a corporate member.
OTCXN is utilises blockchain technologies and smart contracts for its peer-to-peer trading network, which will launch initially for the FX market.
OTCXN's trading platform leverages proprietary blockchain and smart contracts technology designed to provide transparency and operational controls to enable safe and secure trading directly between counterparties, even if they are not known to one another.
The aim of OTCXN is to replace the current credit system in FX, whereby firms are required to establish credit arrangements with prime brokers - a process that can take as long as 18 months to complete - in order to participate in the FX marketplace.
The Depository Trust & Clearing Corporation (DTCC) has completed its proof-of-concept for using a distributed ledger based solution to manage the clearing and settlement of US Treasury, Agency, and Agency Mortgage-Backed repurchase agreement (repo) transactions.
Working with Digital Asset, the two companies have demonstrated the successful netting of “start” leg repo transactions with prior end-of-day net securities obligations in the DTCC environment. With Phase One now complete, DTCC and Digital Asset have progressed to Phase Two, where they will form a Stakeholder Working Group comprised of leading market participants active in the $3 trillion per day U.S. repo and related transaction market to collect independent feedback and ensure the solution is aligned with industry needs.
OTC Exchange Network (OTCXN), a provider of blockchain technology, has appointed Drew Rasmussen as its new CTO.
As OTCXN’s CTO, Rasmussen will be responsible for overseeing all technical design, technological resources, and technology development. Additionally, he will be tasked with facilitating the overall architecture and development of the company’s proprietary Blockchain fabric, also known as distributed ledger technology (DLT).
He will report to Rosario Ingargiola, the company’s founder and CEO.
“We are thrilled that Drew will bring to OTCXN his unique expertise in developing Blockchain technologies specifically for large-scale use cases at global financial institutions,” says Ingargiola.