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Blockchain Technology For Securities

Why The Future Of Securities Trading Is In The Hands Of Blockchain Andai

Why The Future Of Securities Trading Is In The Hands Of Blockchain Andai

Why the Future of Securities Trading is in the Hands of Blockchain andAI Thanks to the advancement of trading technologies, in the last ten years, securities trading, especially in the developed world, has experienced massive disruptions. From the rise of sophisticated derivatives to the emergence of super-intelligent robo-traders, the industry is experiencing disruptions like never before. Now, with the blockchain technology joining the game, things are about to heat up even more. But before we discuss how the combination of blockchain and AI seek to change the securities market, let us look at the advancement of robo-driven trading and how it is shaping the industry. Robo-trading involves the application of powerful algorithms powered by big data to make investment decisions and execute trades. Unlike human traders, the robo-traders can process vast amounts of data and make decisions a zillion times faster with no human emotion or bias thereby improving decision making. Algo-driven techniques such as High-Frequency Trading (HFT) came about after the 2008 global financial crisis and have since then impacted the global securities market in a big way. According to Credit Suisse, as quoted in Business Insider , the trading volume of U.S. shares has more than doubled since the rise of HFT and high-speed trading strategies. The advancement of AI in the subsets of Natural Language Processing and Machine Learning has also made significant progress, making it possible for the algorithms to read relevant trading news as it emerges and act on it instantly. However, this technique is not without flaws as was evident in 2013 when hackers accessed the AP Twitter account and posted a tweet that two explosions had hit the White House injuring the then President Obama. The algorithms Continue reading >>

Blockchain - From Use Case To Business In Securities Markets

Blockchain - From Use Case To Business In Securities Markets

Blockchain - From Use Case to Business in Securities Markets Blockchain - From Use Case to Business in Securities Markets For post-trade services, distributed ledger technology (DLT) is more of a promise than a reality. There are some ideas about how the technology can change the picture at the transaction and post-trade level, but so far no one has demonstrated it is a viable solution to cover the complete securities processing lifecycle. DLT is not a magic wand. Many trials are under way, including a joint venture of French banks that is investigating DLT for post-trade services. DLT is complex from a technical point of view, but there are other issues as well, including how systems can be regulated and how they can achieve critical mass. Any DLT initiative for post-trade processes must have the support of financial regulators, or it will struggle. DLT has the Potential to Significantly Change the Roles of Key Actors in the Securities Markets Some actors, such as custodians and CSDs, may no longer be required as those issuing equities and those buying them can deal directly with each other. The securities markets could evolve into an industry that has a very small number of actors compared with today possibly even just issuers and investors. Nothing is yet certain, but it is interesting that some actors who could be potentially big losers in a DLT system are willing to invest in DLT. There are already DLT platforms that are dedicated to crowd funding and lending that bring together borrowers and lenders. The technology provides the possibility of removing intermediaries from processes. With fewer intermediaries, there is less cost. Most Players in the Securities Industry are Investigating DLT and its Potential For example, reconciliations are a major issue in the sec Continue reading >>

Central Banks Eye Blockchain Technology For Securities Transactions

Central Banks Eye Blockchain Technology For Securities Transactions

Central Banks Eye Blockchain Technology For Securities Transactions Central Banks Eye Blockchain Technology For Securities Transactions Central Banks Seeks Implementation Of Blockchain Technology For Securities Swaps European Central Bank investigates the potential of blockchain tech for Securities Transactions. ECB partners with Bank of Japan to complete this research. Europe: Though cryptocurrency is facing clamp down from various governments, the technology that back cryptocurrency the Blockchain Tech is highly appreciated and embraced. This is seen in the recent move by the European Central Bank (ECB), who is again looking into how the Blockchain technology can be harnessed to transform securities transactions. To forward this study, ECB has just concluded a new findings the second summary with the Bank of Japan (BoJ) this week, Tuesday, 27th March. ECB dubbed this research, which is carried out in partnership with the BoJ, Project Stella. In the second summary research, the ECB looked into how the so-called distributed ledger technology (DLT) would be useful in transforming different securities transactions. Also read: President Of Federal Reserve Bank States Crypto Is Not Currency The first summary of Project Stella came in last Sept., where researchers at that time remained careful of the still-nascent state of distributed ledger technology and the risks associated with it. As a result of the continuous and rapid advancement of the Blockchain tech expertise, the ECB now seems to be more positive on the prospects of a form of securities transaction called delivery versus payment (DvP). The project summary describes this as when operating systems link the transfer of two assets in such a way as to ensure that the transfer of one asset occurs if and only if the tra Continue reading >>

Blockchain: How Blockchain Will Change The Way You Trade In Stock Markets - The Economic Times

Blockchain: How Blockchain Will Change The Way You Trade In Stock Markets - The Economic Times

How blockchain will change the way you trade in stock markets With stock markets across the globe increasingly embracing blockchains native capabilities as the basis for market transactions, the Securities and Exchange Board of India ( Sebi ) is exploring how blockchain technology can be used in the Indian stock market . Recently, Sebi appointed an advisory committee, called Committee on Financial and Regulatory Technologies (CFRT), for conducting research on the blockchain platform and other technologies that have been making waves in the sphere of fundraising, asset management and post-trade settlement. Blockchain offers huge potential for tracing securities lending, repo and margin financing and monitoring systemic risk. Sebi is taking early steps to understand how the technology is being used in markets globally and can possibly derive the benefits gradually. Many market regulators and global exchanges across geographies, including the NYSE and Deutsche Borse, have already showed their intent to evaluate the feasibility and advantages of blockchain. Japans Financial Services Agency has allowed the Japan Exchange Group, which operates the Tokyo Stock Exchange, to use blockchain as its core trading infrastructure. In 2015, Nasdaq unveiled the use of its Nasdaq Linq blockchain ledger technology to successfully complete and record private securities transactions. What does blockchain bring to stock market? Blockchain can be the answer to interoperability, trust and transparency issues in fragmented market systems. Stock market participants such as traders, brokers, regulators and stock exchange are required to go through a cumbersome process (which takes 3+ days to complete transactions, mainly due to the role of intermediaries, operational trade clearance and regulato Continue reading >>

Report On Distributed Ledger Technology: Implications Of Blockchain For The Securities Industry

Report On Distributed Ledger Technology: Implications Of Blockchain For The Securities Industry

Report on Distributed Ledger Technology: Implications of Blockchain for the Securities Industry This paper provides an overview of distributed ledger technology, highlights some key applications being explored in the securities industry and potential impact of the technology, and discusses key implementation and regulatoryconsiderations for broker-dealers. FINRA welcomes an open dialogue with market participants to help proactively identify and address any potential risks or hurdles in order to tap into the full potential of DLT, while maintaining the core principles of investor protection and market integrity. Technological innovations in the industry, operating in accordance with these core principles, have the potential to provide investors with greater access to services and enhanced experiences, offer firms increased operational efficiencies and enhanced risk management, and enable further transparency in the marketplace. This paper is intended to be an initial contribution to an ongoing dialogue with market participants about the use of DLT in the securities industry. Accordingly, FINRA is requesting comments from all interested parties regarding all of the areas covered by this paper. FINRA also requests comments on any related matters for which it would be appropriate to consider additional guidance, consistent with the principles of investor protection and market integrity, based on DLT applications and their implications for FINRA rules. Direct inquiries regarding this paper to Haimera Workie, Senior Director, Office of Emerging Regulatory Issues, at (202) 728-8097; or Kavita Jain, Director, Office of Emerging Regulatory Issues, at (202) 728-8128. The views, expressions, findings and opinions expressed in the comments on this Web page are solely those of the Continue reading >>

Bank Of Canada, Tmx Say Blockchain Feasible For Securities Settlement

Bank Of Canada, Tmx Say Blockchain Feasible For Securities Settlement

Bank of Canada, TMX say blockchain feasible for securities settlement TORONTO (Reuters) - Canadas central bank, Toronto Stock Exchange operator TMX Group ( X.TO ), and non-profit organization Payments Canada said on Friday that tests had shown blockchain technology can be used for automating instantaneous securities settlements. FILE PHOTO: A TMX Group sign, the company that runs the Toronto Stock Exchange (TSX), is seen in Toronto, June 23, 2014. REUTERS/Mark Blinch/File Photo The three organizations said that they had developed an integrated securities and payment settlement platform using a distributed ledger, the same technology that underpins cryptocurrencies like bitcoin, and found that cash and assets can be tokenized to complete an instant settlement. This shows that it is possible to deliver payments in a way that has never been done before by directly swapping cash from buyers to sellers, resulting in instant settlements, said Gerry Gaetz, president and CEO of Payments Canada, the body which ensures financial transactions in Canada are carried out securely. However, Bank of Canada Senior Special Director Scott Hendry told a payments conference in Toronto on Thursday it was not yet clear if the use of blockchain technologies to settle securities transactions would lead to cost savings. Were still uncertain after doing this work that there are significant savings possible for participants, he said. Its not clear that all the participant dealers and banks are going to get a significant benefit out of this settlement system. The tests were the latest phase of an initiative called Project Jasper that the Bank of Canada launched last year in conjunction with TMX and Payments Canada. Jasper is among dozens of fledgling efforts by financial institutions around the gl Continue reading >>

Blockchain: Australian Securities Exchange Adopts Technology | Fortune

Blockchain: Australian Securities Exchange Adopts Technology | Fortune

The Australian Securities Exchange (ASX) has become the first major bourse to announce the adoption of blockchain technologythe same kind of tech that underpins the bitcoin cryptocurrencyto record shareholdings and manage the clearing and settlement of equity transactions. Blockchain or distributed ledger technology (DLT) uses a shared ledger to permanently record transactions in a way that is practically impossible to tamper with. The vendor of this particular platform is Digital Asset, which has the backing of the likes of Deutsche Brse Group, JPMorgan Chase , Accenture, IBM , Goldman Sachs , and of course ASX. ASX said Thursday that its soon-to-be-scrapped Clearing House Electronic Subregister System (CHESS) was world-leading when it was introduced in the 1990s, but testing of the new DLT software over the last two years has shown it to be better. ASX has been carefully examining distributed ledger technology for almost two-and-a-half years, including the last two years with Digital Asset, in order to understand its potential application, ASX CEO Dominic Stevens said in a statement. Having completed this work, we believe that using DLT to replace CHESS will enable our customers to develop new services and reduce their costs, and it will put Australia at the forefront of innovation in financial markets. Unlike bitcoins public blockchain, which relies on copies of the shared ledger that are stored on individual computers globally, ASXs system will be operated by ASX on a secure private network where participants are known, permissioned to have access, and must comply with ongoing and enforceable obligations, the exchange said. ASX will now consult with its stakeholders on the systems functionality when it goes live. It said it will reveal more, including the potential Continue reading >>

The Australian Securities Exchange Endorses The Distributed Ledger -- But Don't Call It Blockchain

The Australian Securities Exchange Endorses The Distributed Ledger -- But Don't Call It Blockchain

The Australian Securities Exchange Endorses The Distributed Ledger -- But Don't Call It Blockchain {{article.article.images.featured.caption}} Opinions expressed by Forbes Contributors are their own. The author is a Forbes contributor. The opinions expressed are those of the writer. This story appears in the {{article.article.magazine.pretty_date}} issue of {{article.article.magazine.pubName}}. {{article.article.magazine.subscription_text}} In a carefully-crafted 1,000 word press release , the Australian Securities Exchange (ASX) on Thursday announced its intention to become the first global stock exchange to adopt distributed ledger (DL) technology aka the blockchain. News organizations around the world breathlessly reported that ASX is leading the way in adopting the blockchain , the database structure that underlies the Bitcoin virtual currency. With Bitcoin surging past the $10,000 mark last week, any story linking a reputable securities marketplace to the notorious cryptocurrency is bound to be big news. Tellingly, ASX never used the word "blockchain" in its press release. It said it was adopting "distributed ledger technology" (DLT) for clearing and settlement. The specific DL technology behind ASX's distributed ledger may or may not include blockchain applications. It certainly won't look anything like Bitcoin. A blockchain is an "append only" database structure in which new records can only be added at the end. Each new record, for example a financial transaction, includes a unique ID code that is mathematically generated as a function of the collective information incorporated in all previous transactions in the database. As a result, if you know the ID code (called the hash ) of the last transaction in the database, you can verify that all previous transactio Continue reading >>

France To Allow Trading Of Securities Via Blockchain

France To Allow Trading Of Securities Via Blockchain

France to allow trading of securities via blockchain Blockchain technology adds transparency to transactions as well as security, experts say. France's finance minister unveiled Friday a decree that would make it the first nation in Europe to allow the trading of some non-listed securities using the blockchain technology that underpins cryptocurrencies. The decree, presented by Finance Minister Bruno Le Maire to the government, should enter into force by July at the latest and will apply to non-listed financial securities that EU law doesn't require to be traded via an intermediary, a market worth potentially more than 3 trillion euros. In particular this includes shares in mutual and hedge funds, negotiable debt securities, and unlisted stocks and bonds. Blockchain technology debuted in 2009 as a public, encrypted ledger for the digital currency bitcoin. It has drawn interest from the established financial sector in recent years because of its potential for securely tracking transactions, allowing anyone to get an accurate accounting of money, property or other assets. Blockchains record transactions as "blocks" that are updated in real time on a digitised ledger that can be read from anywhere and does not have a central recordkeeper. It is considered to be secure as all changes should be made simultaneously among all users. "The use of this technology will permit fintechs and other financial actors to offer new solutions for exchanging securities, solutions that are faster, cheaper, more transparent and more secure," Le Maire told journalists. Fintechs are startups trying to shake up the financial sector via the introduction of new technology. Le Maire said the decree "is a way of telling firms 'come do live tests here, in a secure legal framework'." Becoming the fir Continue reading >>

Report: France To Allow Blockchain Tech For Securities Transfers

Report: France To Allow Blockchain Tech For Securities Transfers

Lost among the national mourning for French icon Johnny Hallyday was the news that France will allow Blockchain technology to be utilized to transfer certain securities. According to a report in Les Echos, distributed ledger technology has been presented to the Council of Ministers and they have approved its utilization. The one caveat is that Blockchain may not be used for listed securities as this is governed by EU law. We made the choice of the technical neutrality concerning the blockchain, commented a Treasury representative. While listed securities are excluded non-listed securities transactions are not small. In fact the article states3 billion in commercial paper, fund shares and other debt may be transferred far more efficiently using distributed ledger technology. Several firms have already tested Blockchain and are ready to go. Bruno Le Maire, Minister of Finance, was quoted on the announcement; The use of this technology will enable Fintechs and other financial players to offer new solutions for transfers faster, cheaper, more transparent and safer solutions, The benefits are obvious: greater transparency, authentication, speed at a lower cost. The only remaining step is to work out the actual details. The announcement in France comes on the heals of the Australian Stock Exchange announcing all transactions will be managed in a permissioned Blockchain a first in the world for a public exchange. Continue reading >>

France Allows Use Of Blockchain To Trade Some Traditional Securities

France Allows Use Of Blockchain To Trade Some Traditional Securities

France Allows Use of Blockchain to Trade Some Traditional Securities New rule is latest mainstream effort to adopt record-keeping developed for virtual currencies France said Friday that it will allow wider use of the record-keeping technology behind bitcoin in the issuance and trading of traditional securities, part of a growing number of experiments to speed up trading by decentralizing it. The change is the latest seal of mainstream approval for systems, often called blockchains or distributed ledgers, that were first developed to allow total strangers on the internet to place faith in virtual-currency transactions without the need for a trusted third party. Bitcoin's price has risen more than 900% this year, but it's seen wild fluctuations ranging from 44% up or 25% down against the dollar. The WSJs Thomas Di Fonzo visits New York City's bitcoin ATMs to demonstrate just how volatile the virtual currency can be in just a day. Photo: Alexander Hotz / The Wall Street Journal Copyright 2018 Dow Jones & Company , Inc. All Rights Reserved.

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  • Securities Services: Blockchain - A Beginners Guide

    Securities Services: Blockchain - A Beginners Guide

    Securities Services: Blockchain - A beginners guide Think you understand and grasp the concept of blockchain technology? Prepare to be surprised as Daniel Ben-Ami explains the theory and potential uses within securities services The term blockchain is widely known, but few understand what it means. It is a file that can be shared between entities. Characteristics include the lack of a single centralised record, security and the ability to resist amendment. Applications are in their early stages at present but the potential is great. It is always difficult to predict with accuracy which technological innovations will take off. Even experts get it wrong. Breakthroughs which were anticipated with confidence, such as flying cars, have failed to materialise. In contrast, some inventions, such as text messaging, achieve unexpected success. In the case of blockchain it has reached the stage where people have heard of it, few can define it and even fewer explain it. Technical specialists from the securities services industry, central banks and trade associations are working hard to remedy these deficiencies. Despite the lack of knowledge there is no shortage of hype. A 2015 study produced for the World Economic Forum in collaboration with Deloitte made the claim that: Decentralised systems, such as the blockchain protocol, threaten to disintermediate almost every process in financial services. Many are hailing its potential to revolutionise the investment industry in particular. Outside the financial world there is talk of using it for a variety of applications including tracking individual diamonds, making back-up copies of human DNA and simplifying trade documentation. This article will outline the current state of knowledge for non-specialists in the investment and pensions Continue reading >>

    How Stock Exchanges Are Experimenting With Blockchain Technology

    How Stock Exchanges Are Experimenting With Blockchain Technology

    How Stock Exchanges Are Experimenting With Blockchain Technology June 12, 2017, 08:50:48 AM EDT By Prableen Bajpai Today, blockchainthe technology behind the digital currency bitcoinmight seem like a trinket for computer geeks. But once widely adopted, it will transform the world, says Ginni Rometty,CEO of IBM. How right she is. Blockchain has ignited curiosity among industries and sectors, especially in finance, and has been called the future of financial services infrastructure." While banks were among the first to hop aboard the blockchain bandwagon, stock exchangesan integral part of capital marketsare quick to keep pace. Today, some of the most prominent stock exchanges are looking at ways to leverage the distributed ledger technology (DLT) in order to fundamentally overhaul traditional mechanisms. The functioning of stock exchanges involves complex procedures that can be time consuming, cost inefficient, cumbersome, and prone to risks. The multi-layered processespre-trade, trade, post-trade and custody, and securities servicingis extraordinarly complex. This makes a case for experimentation with blockchain, thanks to its potential ability to streamline the process. A report by Oliver Wyman suggests, IT and operations expenditure in capital markets is currently close to $100-150 billion per year among banks. On top of that, post-trade and securities servicing fees are in the region of $100 billion. Significant capital and liquidity costs are also incurred because of current delays and inefficiencies within market operations. The distributed ledger technology could enable savings for the entities involved by reducing duplication of processes, settlement time, collateral requirements and operational overheads. This, in turn, would minimize the need to set aside fina Continue reading >>

    Deutsche Brse Plans Blockchain Securities Platform With R3 Tech

    Deutsche Brse Plans Blockchain Securities Platform With R3 Tech

    Deutsche Brse Plans Blockchain Securities Platform with R3 Tech Deutsche Brse Group, the Germany-headquartered securities listing and trading exchange, is planning to develop a blockchain-based system for securities lending. According to an announcement on Monday, Deutsche Brse said it plans to develop a system that can offer more efficient securities settlement, and will use technical support from financial management firm HQLAXand blockchain startup R3's Corda platform. The exchange explained that the move comes due to a fragmented global securities system that incurs higher operational costs, while lowering settlement fluidity. "These assets are in heightened demand due to the implementation of bank regulations for liquidity, mandatory clearing and margin requirements for OTC derivatives," the exchange said. "Our goal is to mobilize liquidity across pools of collateral currently residing in disparate custody accounts around the globe." The announcement also marks yet another major financial institution eyeing blockchain technology to streamline existing business flow, while maintaining regulatory transparency. In fact, HQLAXand R3 have already developed a solution for securities lending in partnership with banking giants including Credit Suisse and ING. Using the solution, the banks completed a transaction of $30 million-worth of securitiesover a blockchain-powered platform in early March, following a proof-of-concept conducted last year. Deutsche Brse image via Wikimedia Commons/Dontworry The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies . CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockch Continue reading >>

    Blockchain For Securities Trading: Black Swan Or In-housepet?

    Blockchain For Securities Trading: Black Swan Or In-housepet?

    Blockchain for Securities Trading: Black Swan or In-HousePet? Gary J. Aguirre is a trial attorney whose practice focuses on securities regulation, securities litigation, market abuse, ICO investigations and litigation, and the representation of whistleblowers in the financial industry and regulatory agencies. Mr. Aguirre holds an LL.B. from Berkeley Law and an LL.M. with Distinction from Georgetown Law Center in securities regulation and international law. Contact: [email protected] Two forces now conflict over how blockchain will be integrated into the financial markets. On one side are those seeking to use blockchain as a disruptive force, a blackswan that will change the way the capital markets work around the world. On the other side are those who seek to incorporate blockchain based on decentralization into the existing centralized banking system, the in-house pet. Photo: Loc LeGuilly The Securities and Exchange Commission (SEC) has been assessing how to allow blockchain technology to be integrated into the regulatory landscape. A potpourri of market participants vies to influence this process. All agree changes are coming. Some would change securities trading and settlement in ways that would curb market abuse and level the playing field for investors, especially retail investors, while others are proposing changes that could steepen it. The potential for blockchain technology to curb market abuse will likely turn on two factors: (i) the extent to which it distributes meaningful information to investors on specific securities; and (ii) at what stage (trading or settlement) it becomes operative. If blockchain technology widely distributes meaningful data to investors and kicks in when trades occur, it would significantly curb market abuse. If neither of these Continue reading >>

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