DTCC Blockchain Technology Shows Successful Results in Test
by
Vassil Nikolov
The recent test was aimed at verifying the usage of blockchain technology in a Wall Street trading context.
Big banks like J.P. Morgan Chase & Co and Citigroup Inc. recently conducted tests of the Bitcoin-connected technology for keeping records on credit-default swaps, which could increase bitcoin popularity in the financial area.
The swaps are insurance instruments paying off if a bond fails, and the finding of the over-the-counter contracts might be a problem. Banks connect future sellers and buyers, transfer the trades by a service led by Markit Ltd. and dispatch this data to Depository Trust & Clearing Corp (DTCC), central bookkeeper at Wall Street.
The latest probation period has shown that the major part of this record-keeping process is fulfilled with ‘Blockchain’ technology.
DTCC is going to decide if the results are good enough for implementation of this technology in live trading or for credit-default swaps which corresponds to trillions of dollars.
One of DTCC leaders, Chris Childs, says that he is not ready to make final conclusions from the results, but they seem good enough for now.
The recent test was aimed at verifying the usage of blockchain technology in a Wall Street trading context. At the same time, Bitcoin itself has severe legal problems, with general turbulence revolving around it, but it has proven to interest the financial world greatly.
Banks has lately invested significant amounts of money and manpower in finding ways of using private blockchains to (or “intending to”) cut future costs.
Barclays PLC, for instance, has agreed to a partnership with Circle Internet Financial Ltd, a bitcoin company, so as to use Circle’s digital money application.
Autonomous Research experts say that it is possible to save about a third of costs of setting trade by using blockchain, bringing savings of up to $16 billion a year. Citigroup has published a report predicting that such automation may cut two million employees from banking in the next decade.
This test simulated a monthly volume of trade in the credit default swap market, equal to $6.7 trillion in face value of contracts. Electronic CDS agreements stored on different individual servers will be substituted with a record on a conventional blockchain network.
Among the participants of this test were Credit Suisse Group AG and Bank of America Corp. as well as other huge banks and also Axoni, a startup trying to integrate bitcoin technologies to the banking world.
Markit Ltd., a data provider, currently has 6 active projects with blockchain technology. However, the CDS test is the most representative, according to Markit’s vice president Jeffrey Billingham.
Live usage of blockchain technology in trading might be possible in the far future. Depository Trust & Clearing Corp plans to research if banks and regulators are interested in this technology.
Currently regulators, among which are the Federal Reserve, the Exchange Commission and the Commodity Futures Trading Commission, suggest that further examinations of the blockchain technology are needed.
Recently DTCC announced its new partnership with Digital Asset Holdings LLC, a venture created by former J.P. Morgan employee Blythe Masters, to test if repos (short-term lending arrangements) can be resolved with blockchain technology.
Big banks like J.P. Morgan Chase & Co and Citigroup Inc. recently conducted tests of the Bitcoin-connected technology for keeping records on credit-default swaps, which could increase bitcoin popularity in the financial area.
The swaps are insurance instruments paying off if a bond fails, and the finding of the over-the-counter contracts might be a problem. Banks connect future sellers and buyers, transfer the trades by a service led by Markit Ltd. and dispatch this data to Depository Trust & Clearing Corp (DTCC), central bookkeeper at Wall Street.
The latest probation period has shown that the major part of this record-keeping process is fulfilled with ‘Blockchain’ technology.
DTCC is going to decide if the results are good enough for implementation of this technology in live trading or for credit-default swaps which corresponds to trillions of dollars.
One of DTCC leaders, Chris Childs, says that he is not ready to make final conclusions from the results, but they seem good enough for now.
The recent test was aimed at verifying the usage of blockchain technology in a Wall Street trading context. At the same time, Bitcoin itself has severe legal problems, with general turbulence revolving around it, but it has proven to interest the financial world greatly.
Banks has lately invested significant amounts of money and manpower in finding ways of using private blockchains to (or “intending to”) cut future costs.
Barclays PLC, for instance, has agreed to a partnership with Circle Internet Financial Ltd, a bitcoin company, so as to use Circle’s digital money application.
Autonomous Research experts say that it is possible to save about a third of costs of setting trade by using blockchain, bringing savings of up to $16 billion a year. Citigroup has published a report predicting that such automation may cut two million employees from banking in the next decade.
This test simulated a monthly volume of trade in the credit default swap market, equal to $6.7 trillion in face value of contracts. Electronic CDS agreements stored on different individual servers will be substituted with a record on a conventional blockchain network.
Among the participants of this test were Credit Suisse Group AG and Bank of America Corp. as well as other huge banks and also Axoni, a startup trying to integrate bitcoin technologies to the banking world.
Markit Ltd., a data provider, currently has 6 active projects with blockchain technology. However, the CDS test is the most representative, according to Markit’s vice president Jeffrey Billingham.
Live usage of blockchain technology in trading might be possible in the far future. Depository Trust & Clearing Corp plans to research if banks and regulators are interested in this technology.
Currently regulators, among which are the Federal Reserve, the Exchange Commission and the Commodity Futures Trading Commission, suggest that further examinations of the blockchain technology are needed.
Recently DTCC announced its new partnership with Digital Asset Holdings LLC, a venture created by former J.P. Morgan employee Blythe Masters, to test if repos (short-term lending arrangements) can be resolved with blockchain technology.
Institutional FX Demand Continues to Climb in April
Network, Learn, Grow | FMAS:24
Network, Learn, Grow | FMAS:24
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Don't miss out on this 5-second invite packed with energy and urgency!
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
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Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
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Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
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Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
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Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
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