News
Global Banks in Test of US$11 Trillion Shared Ledger at DTCC
Regulators and Credit Derivatives industry prep for 2019 Go-live 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 …
Distributed Ledger Tech Can Process U.S. Stock Volumes, says DTCC
Accenture cloud model scales to 100 million trades daily in study prototype 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 …
Disrupters Fail to Move Needle with Securities Lending Solutions
The Bank of England’s Securities Lending Committee took up the question of distributed ledger technologies (DLT) in its September 24 meeting. Three vendors were invited to present their concepts to the group of nearly two dozen UK bankers and their regulators. The presentations and the Committee members’ reactions were summarized in the minutes of the meeting. Each vendor approached the market from a different perspective, using a different aspect of DLT. Members found some value in the proposed solutions, yet were generally disappointed in the market impact of the innovative approaches.
Fintech Plans Announced to Digitize Portfolios in the Capital Markets
More than 1,200 dealmakers brought their ardor and business plans to sold-out Polycon18, a giant-sized version of television’s Shark Tank which convened at the Bahamas’ Bal Mar Grand Hyatt Hotel from February 28th to March 3rd, 2018. Attending investors were shown project offerings, as well as conference materials that cited U.S. Senate testimony by SEC chair, Jay Clayton, to the effect that initial coin offerings (ICOs) of securities tokens would indeed be considered securities:
“When investors are offered and sold securities – which to date ICOs have largely been – they are entitled to the benefits of state and federal securities laws and sellers and other market participants must follow these laws.”
JPMorgan Chase Tests Blockchain Use for Securities Services
On May 16, 2018, JPMorgan Chase unveiled Dromaius, its prototype of a shared ledger for capital market services, at Coindesk’s Consensus 2018 conference. The prototype is designed to test the use of the Ethereum blockchain technology in supporting a coordinated posting by multiple entities to a single encrypted securities bookkeeping system. JPMC executive director Christine Moy said that, “We think the technology has the potential to be transformative.”
Ms. Moy, who leads J.P. Morgan’s Blockchain Center of Excellence, told the Wall Street Journal that the technology “should streamline operations, help with cost savings and overall make the experience of transacting or issuing a financial instrument like this more seamless and simplified.”
For the Want of a Nail … the Details of Regulatory Reform
To look for the effect of new rules on banks, regulators rely on academic models that treat banks as aggregates. In truth, global banks are collections of service businesses, not simply larger versions of George Bailey’s 1946 community lender. Missing that fact may be one reason why the list of unintended consequences from regulatory reform is growing. Critics in the U.S., without anticipating a challenge, are calling for the repeal of the Dodd-Frank Act. But expecting repeal is a dangerous strategy for bankers.
BIS Issues Further LCR Guidance
On June 8, 2017, the Basel Committee on Banking Supervision (BIS) issued a second set of frequently asked questions (FAQs) and answers on Basel III’s Liquidity Coverage Ratio (LCR).
All the Bonds in Christendom
The 180th anniversary of J.P. Morgan’s birth will fall on Monday, April 17th, 2017. The great financier died aged 76, a few months after testifying before the U.S. Congress in the Money Trust hearings.
Treasury Plans Broad Industry Role in Regulatory Policy
Following up on the publication of its first banking policy report in June, the U.S. Treasury released two more reports on Capital Markets and Asset Management. From the tone of all the reports, it’s clear that Treasury intends to lead the regulatory agencies of the executive branch into a new era of consultative rule-making, with the industry taking a more active role than it has over the last several years.
Fed Reports Post-Crisis Regulation Affecting Bond Market Liquidity
In its semi-annual Monetary Policy Report submitted to Congress on July 7, 2017, the Federal Reserve Board indicated that regulatory reforms since the global financial crisis “have likely altered financial institutions’ incentives to provide liquidity.” The Fed found that In recent years, market participants have been particularly concerned with liquidity conditions in the corporate bond market.