Barclays and Goldman Sachs are testing the ISDA standards for blockchain to trade derivatives

According to the initial plan of the International Association of swaps and derivatives (ISDA), baccani and smart contracts was to eliminate inefficiencies and reduce costs in derivatives trading. But two years passed, and the main problem is still not solved.

Before banks and traders will be able to rely on the technology of distributed registry like the widely advertised «the only authentic account book», you need to improve the standardization of processes. Currently, to track the life cycles of transactions, banks use a combination of data structures and formats.

In other words, the special benefits of using a common registry is not observed.

Now blockchain evangelists of the financial world are pinning their hopes on the harmonization of the method for providing and accounting for data that are independent of the underlying platform. In may last year, ISDA has proposed to use the Model of General domain (Common domain model, CDM), which enlisted the support of several technology start-UPS, for example, R3 and Axoni.

However, champion the use of CDM in order to make the blockchain a reality in the space of derivatives, can rightly be called Barclays Bank.

This British Bank has recently created an international working group on the application of the CDM model and is going to present his vision of combining smart contracts with this model at the annual conference of ISDA in Miami.

For a project this is very important because already in early summer, ISDA plans to launch the first stage compatible with bloccano version of the CDM.

The representative team Barclays Call Sunil (Sunil Challa) said:

«It’s very new technology, which should become the panacea in resolving the many post-trading issues. The time to rebuild our processes.»

A common language

Looking back, it’s safe to say that Barclays has played a key role in bringing technology distributed registry (DLT), smart contracts and standards distributed data. Two years ago, the Bank demonstrated a model that allows the use of smart contracts in the lifecycle of derivatives trading, including the negotiation of ISDA main agreement, the conclusion of individual transactions and their implementation in a distributed registry.

According to the representative of the technology division of Barclays Whether the brain (Lee Braine), the model caught, however, standards remained at the stage of adaptation. On the one hand, the platforms of the distributed registry gradually reach the stage of making some of the most important players in the market infrastructure.

«Observe the absorption by industry of common standards, says brain, as a result, in the space derivatives, we need many of the market infrastructures, including lot clearing-houses, adapting a common standard for data formats, databases, data transactions and business processes.»

In this sphere, according to Barclays and certain other industry participants, the CDM model is most applicable.

Traditionally, banks are working to standardize the format of mutual communications, but retain their own individual ways, the internal exchange of information – as well as a country with its own national language has several local dialects.

However, the brain emphasizes that CDM and DLT have one goal in the further advancement and standardization of data within institutions.

In this regard, the CDM may provide an alternative route to solve the problem of interoperability between different platforms of the blockchain. Now, we often hear that the industry is too «blockchain-neutral», so to rely on one single platform is too risky.

To demonstrate this, brain described a future scenario in which banks interact with each other in different distributed registries. Does this mean that if you have a certain number of participants in different networks, you must have a computer node in each of these networks? Or they are interchangeable?

«In the transition to the model of CDM will be able to standardize data structures, life-cycle events and the like.»

If it sounds convincing enough, Barclays is reminiscent of a large cost saving for the derivative market. The working group of the Bank calculated that the savings from the use of the model CDM is 25% or about $2.5 billion in annual costs.

The popularity of the technology

Certainly, Barclays is not the only representative of the financial world that supports the model CDM. A supporter of the idea is the Bank Goldman Sachs, which considering the standard of General data in combination with distributed registries as a way of mitigating some of the pressure created by the increase in regulatory requirements.

Engineer Goldman Sachs As Haji (Haji Ayaz) said that a General understanding of conditions and events in the life cycle of a product should not only reduce inefficiencies but also to provide a platform to further improve efficiency.

On the other hand, applying the standard, an investment Bank is not going to abandon alternatives to the blockchain.

«Familiar with the project CDM people realize that the constant overall implementation similar to the DLT is the most optimal way of using the model,» says Hadji — that is, we are also open to possible implementations and provide feedback about sellers model».

Position Barclays is less evasive than Goldman, and the Bank has already created a scenario using DLT in combination with the General standard.

For example, brain emphasized the way in which the standard data can strengthen another advantage of the blockchain.

A well-known scenario of the use of technology is streamlining regulatory reporting – the regulator can control the node in the blockchain and extract data from it directly. The problem is that in today’s world, banks have their main data trade, and their risk models essentially duplicate them.

Ultimately, achieving common standards for the implementation of the blockchain is a team sport and winning is still far.

Добавить комментарий