Traditions

Financial practices before the invention of computers were conducted with reliance upon tangible forms of security and personal insights into the character of those who were pledging collateral. By examining the practices by which business was conducted at those times it is possible to understand the traditions upon which today’s business should be conducted. In this section we review passages from contemporaneous textbooks which describe those traditions that are most relevant for the management of today’s financial market evolution.


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Monday, May 13, 2019

Distributed Ledger Technologies in Securities Finance

As Revolutionary as Central Securities Depositories?

Author: Ed Blount

The most powerful Distributed Ledger Technologies (DLT) for securities finance will be cloud-based data lakes in which blockchains and shared ledgers form the currents and eddies. Smart contracts will power the mills that channel the data flows to provide services to their participants. In their potential, DLTs can reengineer current securities processes in the same way that central securities depositories (CSD) did in the 1970s … so long as the looming limitations can be overcome.

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Tuesday, February 19, 2019

Systems Experts Set the Bar for Blockchain in Securities Finance

“Hype and Reality for Blockchain and Distributed Ledger Technologies” at Institutional Securities Lenders’ Meeting

Author: Ed Blount
February 6, 2019 —Systems entrepreneurs - Armeet Sandhu, Sal Giglio, and Ed Blount - engaged in a lively brainstorming session with Chris Ferris, IBM’s Distinguished Engineer for Open Source Technologies, at IMN's 25th Annual International Securities Finance and Collateral Management Conference. Key take-aways from the panel discussion were:
 
  • Current private blockchains are no more complex than web servers, but creating the design and consortium is challenging; 
  • IBM has tools to preserve confidentiality in shared ledgers while guaranteeing accountability;
  • Off-chain lifecycle event processing can link to the blockchain and prove to the shared ledger; 
  • Shared ledgers can help lenders comply with the Securities Finance Transaction Repository (SFTR) mandate;
  • Blockchains can help track loans for principals and service providers in peer-to-peer (P2P) lending programs. 
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Thursday, January 10, 2019

Taking Stock of Blockchain for Improving Securities Services

Initial hype has ebbed and real progress is being made

Author: Ed Blount

The early torrent of media hyperbole about distributed ledger technologies (DLT), such as blockchain and shared ledgers, has now been supplanted by reflection on lessons learned. Scaling concerns were allayed to some degree by DTCC’s November 2018 report that its study of throughput capacity for DLT was sufficient to handle massive U.S. equity trading volumes. More positive ink came as a group of 15 global banks reportedly eased ahead from initial testing to a planned 2Q19 start date for adopting the newly re-coded $11 trillion Trade Information Warehouse at DTCC, in which IBM created a shared ledger for tracking the lifecycle events of 98% of all credit default swaps.

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Monday, November 12, 2018

Global Banks in Test of US$11 Trillion Shared Ledger at DTCC

Regulators and Credit Derivatives industry prep for 2019 Go-live

Author: Ed Blount

Announced on November 6, 2018, the addition of Barclays brings to 15 the number of dealers in the main blockchain project of The Depository Trust & Clearing Corporation (DTCC). By recoding the DTCC’s Trade Information Warehouse (TIW) for bilateral credit derivatives in only 18 months, the securities depository and its team of IT consultants – IBM, Axoni and R3 – hope to show that distributed ledger technology and cloud platforms are feasible options for high volume transaction processing and recordkeeping systems -- initially for those services with similar data architectures on a permissioned platform.

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Thursday, October 18, 2018

Distributed Ledger Tech Can Process U.S. Stock Volumes, says DTCC

Accenture cloud model scales to 100 million trades daily in study prototype

Author: Ed Blount

On October 16, 2018, the Depository Trust & Clearing Corporation (DTCC) reported that “distributed ledger technology (DLT) is capable of supporting average daily trading volumes in the US equity market of more than 100 million trades per day.” Based on a cooperative study by Accenture, Digital Asset and R3, the clearing and settlement service provider said that DLT can process daily trading volume at peak rates of 6,300 trades per second for five continuous hours. Past benchmarks were based on cryptocurrency blockchains that now operate at fewer than 100 trades per second.

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