Blockchain / Distributed Ledger Technology

Transcription

1 1 Blockchain / Distributed Ledger Technology Monica Singer, CEO Strate

2 2 Disrupt yourself or be disrupted!

3 Areas Ripe For Disruption 3 Complex Industries Broken Trust Redundant Intermediaries Limited Access Collaborative Lab / Rachel Botsman 2014

4 Disruptive Power 4 The internet revolutionised the world as it enabled the instantaneous exchange of information blockchain with allow the instantaneous exchange of assets

5 Types of Ledgers / Networks 5 Cultural Adoption / buy in for a decentralized network

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9 9 Opportunity: Material Competitive Advantage Risk: Disruption

10 Don t rely on Government or Regulations to protect your business! 10

11 11 Looking ahead New paradigm of thinking Blockchain is going to fundamentally change the way the financial world operates Uber and Airbnb targeted highly regulated industries head on, to the point where new laws are being written to allow these services to thrive. The CSD industry, can no longer rely on the regulations to protect their businesses Blockchain / Distributed ledgers may not exist in their pure form in future but the benefits they introduce will be realised through other technology

12 The Benefits of Blockchain 12 Lower operational costs and risk and transformation of delivery versus payment Elimination of complex and costly system interfaces (infrastructure and software) and reconciliation procedures in the posttrade environment. Elimination of third-parties reduces costs for exchanging assets

13 The Benefits of Blockchain 13 Reduced Regulatory Reporting and Lower Risk of Fraud This technology enables regulators to do a comprehensive audit that allows any movement of assets (on a cryptographic network) to be traced back to their origin.

14 The Benefits of Blockchain 14 Instantaneous confirmation and settlement of securities and lower costs of cross-border payments and lower collateral requirements Short Settlement time reduces risk that counterparties will not be paid. Interbank transfers will take a lot quicker. Significant savings to banks and end-users as they bypass existing international payment networks. The amount of collateral required to back trades is reduced and moved around the system quicker.

15 Regulatory, Central Bank and Industry Body Developments 15 A number of International securities regulators have announced that they will be studying blockchain and the impact on securities markets around the world as follows: o International Organization of Securities Commissions (IOSCO) Board agreed on 22 February 2016 to intensifying work on technological change with particular relevance for securities regulators, including blockchain o European Securities and Markets Authority (ESMA) is currently exploring the impact of blockchain on mainstream financial services and hosted an event in December 2015 dedicated to the topic. o The International Securities Services Association (ISSA) and the World Forum of CSDs have formed a blockchain working committee respectively o Public announcements have been issued by a number of central banks on the topic including the European Central Bank, Federal Reserve Bank and the Japanese Central Bank.

16 International CSD Developments 16 o International Central Securities Depositories (ICSD) Euroclear, Clearstream and the DTCC have all issued public statements and /or white papers stating, in one way or another, that blockchain technology it is set to be the biggest disrupter yet to Financial Market Infrastructures. They have indicated that first to market will be critical and are investing a significant amount of time and money into research which they are not willing to disclose. o Australian Securities Exchange (ASX) The Australian Securities Exchange (ASX) has publically stated that they are embarking on a blockchain technology research initiative in their post-trade area to replace their core-equities settlements system. ASX is driving this initiative in the Australian Market and is involving key stakeholders and the regulators. They have invested over US$ 10 million in the project to date.

17 International CSD Developments cont o National Securities Depository Limited - Russia Researching two use-cases namely Proxy Voting and Trade Repository services. They are currently running Proof of Concepts on these two use-cases. o The Canadian Depository for Securities Limited Embarked on various research initiatives and will be engaging with their vendors (Indian based) on mapping potential use-cases onto a blockchain. o The Japan Exchange Group (JPX) Jointly developing Proof of Concept with IBM for blockchain using low transaction securities. o R3 A financial technology firm and collaborative initiative by 40 large international banks which is attempting to develop a common crypto-technology-based platform.

18 18 An Internal Approach to Take Up skill and train your staff / market / board on Blockchain Identify technology partners and explore use cases / proof of concepts to learn about the technology Engage with regulators, central banks and clients Drive collaboration within your market as a thought leader to implement changes Subscribe to daily literature discussing these developments

19 19 An AMEDA Approach AMEDA to discuss forming a Blockchain Working Group Share experiences of engagement with stakeholders, regulators and vendors Explore alliances to connect blockchains / interoperate with each other in future

20 Some Vendors / Consultants 20 BlockX Chain Consensys Digital Asset Holdings Equichain Etherium Factom IBM Multichain itbit Open ledger R3

21 21 Potential Use Cases Financial instruments, records, models, out of network assets: Currency, private and public equities, bonds, derivatives, gold, other commodities, diamonds, voting rights associated with financial instruments, derivatives, transaction records (e.g. trading), collateral management, crowd-funding, P2P lending, microfinance, (micro) charity donations etc. Public records Land and property titles, vehicle registries, business license, business ownership/ incorporation/ dissolution records, regulatory records, criminal records, passport and ID, birth or death certificates, voting ID, registration and rights etc. Private records Contracts, ID, signature, wills, trust, escrow, any other type of classifiable personal data (e.g. physical details, date of birth, taste) etc. Semi-private/semi-public records High school/university degrees and professional qualifications, grades, certifications, human resources records, medical records etc. Physical asset keys (e.g. in relation with Internet of Things) Key to home, office, car, locker, safety deposit box, mail box, hotel rooms etc. Intellectual property Copyrights, licenses, patents, proof of authenticity or authorship etc. Other records Cultural, historical events, documentary (e.g. video, photos, audio) etc.

22 22 THANK YOU Monica Singer CEO Follow us on Twitter, Facebook and LinkedIn