Sell Side Forges Ahead with Ambitions for Live Blockchain
Regardless of how jaded people may be of hearing about distributed-ledger technology (DLT) projects, prototypes or proof-of-concepts, the industry is nonetheless forging ever onwards, both in terms of financial investment and research efforts, driven by the participation of the sell side.
This week it was the turn of both R3 and the Digital Trade Chain Consortium (DTC) to announce new developments regarding their respective efforts to get DLT live in the capital markets as soon as possible.
R3 seems to have recovered from a few setbacks at the end of last year, as big-name banks such as JPMorgan, Goldman Sachs and Morgan Stanley departed the consortium. In May, the group announced it had raked in $107 million from one funding round, following that with announcements earlier this month that its Corda platform had entered public beta and a collaboration with the International Swaps and Derivatives Association (ISDA) to standardize data, legal documentation and business processes for smart contracts.
Now R3 and four of its bank members—ABN Amro, Commerzbank, ING and KBC—have developed a prototype solution for the issuance of euro commercial paper on the Corda platform. The project tested a distributed ledger that records, executes and manages institutions’ financial agreements that differ from the issuer’s domestic currency.
Meanwhile, the DTC (not to be confused with the DTCC) picked IBM to develop a blockchain-based international trading platform, utilizing the blockchain framework Hyperledger. The group was established in January this year, and features institutions including Deutsche Bank, HSBC, Rabobank, Société Générale. The platform will be based on Belgian-bank KCBs blockchain prototype, with IBM now taking on responsibility to bring a solution to market that will allow all participants in domestic and cross-border trade greater transparency and connection to the trade process, both online and via mobile devices.
Both projects seem well-intentioned and supported as sell-side institutions continue to throw their weight into blockchain development, although not overly ambitious given how enthusiastic some of DLT’s more outspoken advocates can be on the technology’s potential to disrupt the institutional investment process.
As ever, progress in this space should be welcomed but not lauded too highly—DTC claims production is expected to start at the end of the year, while R3 only mentions “possible production.” Until this happens and tangible evidence is presented, it seems to me that the blockchain is still very much a solution searching for a problem.
My colleague, James Rundle, recently wrote about how the blockchain is being developed with an “everything for everyone” mentality and it’s well worth a read.
Source: WATERS TECHNOLOGY by John Brazier