Friday, March 6, 2020

CBDC, substitution, FSB, stable coins, Covid

Covid = COronaVIrus.
A corvid is a bird.
(Copied from Twitter)

Been a while between posts. No apology for that. Lots of news to digest.

This week, I had the pleasure of attending a 'Breakfast Briefing'. Of course the topic that lured me was crypto. The panel was almost painful. I felt frustrated as they hopped between topics. To one observer, it looked like the crypto industry had made no progress in the last 2 years. I disagree. Crypto is great and crypto is here to stay. It is not when or if, it is how we will embrace it.

Last week-end, on a Sunday, I got a nice BIS email with an update on CBDC. (Central Bank Digital Currency).
It takes an in-depth look at the world of payments, including CBDC (from p85, the report in total runs over a 100 pages).
I do like Central Bank papers, they are clear, argued, and outline their premises and assumptions. (The panel I attended,  did not). With this clarity, this 'unpacking' of things, comes clear disambiguation. Clarity of terminology has been lacking in the crypto world from the outset, and in that regard, it is not much better today. Disambiguation is one of my crypto themes.
Given the current interest in Stable Coins, I gave it a read, but I confess, I didn't find it that great.
My problem was with the underlying assumptions. Do I really want access to CeBM (Central Bank Money v's CoBM, Commercial Bank Money?). Yes for high value / wholesale, no for retail. What I do want is certainty and finality. I want recourse and to have that, I expect a governance framework for dispute resolution. Hey, things go wrong. I don't really care, so long as we can put it right. It's when there is no recourse there is outrage and indignity.

I am also a big fan of Distribution. And one thing in the paper really resonated with me:
"When it comes to achieving resilience, neither a DLT-based system nor a
conventional one has a clear-cut advantage. The vulnerabilities are simply different.
The key vulnerability of a conventional architecture is the failure of the top node, for
example via a targeted hacking attack. The key vulnerability of DLT is the consensus

Exactly this, crypto is new, but not to be feared. So often what we do is just a substitution or transfer of risk. CCPs do not eliminate counterparty risk from the system, they concentrate it and mitigate it. It is a transfer of risk and it works well. We understand it.

All is not lost however. There is a further article "On The Future of Securities Settlement" from p67, with a nice round up of the various Central Bank initiatives in the annex on p81.

FSB Chair’s letter to G20 Finance Ministers and Central Bank Governors: February 2020
There are a couple of important themes coming out of this (of interest to me):
1. So-called ‘stablecoins’. The FSB is resolved to quicken the pace of developing the necessary regulatory and supervisory responses to these new instruments. It will issue a draft report on regulatory issues and possible responses for public consultation in April.
2. Cross-border payments. Recognising the importance of efficient and inclusive payment services for global growth, the Saudi G20 Presidency has requested the FSB to coordinate the development of a roadmap for improving cross-border payments. The FSB will deliver this roadmap to the G20 in October.

I've been trying to get people into the mindset that Fiat, is just another piece of inventory. We DvP one thing versus another, IvI or Inventory v Inventory. This terminology is also TvT (Token v Token) or DvD (Delivery v Delivery). If we can get that T, to be a 'stablecoin' with CeBM backing, WooHoo! We're so much closer to DvD. (Ultimately, I'm a DvP model 3, hybrid guy, but very happy to start w/ DvP model 1).

I also firmly believe crypto has a major role to play in the facilitation of cross border payments.

I am still unsatisfied with the risk management of transactions while they're in the mem-pool awaiting the next block write, but I am very encouraged by some of the things to address that.
As a final generalisation I don't feel nearly enough is being made of "you see what I see" on a DL (Distributed Ledger), nor the ability to enrich a DL.

I think that's enough of a rant for today. Please welcome me back to your inboxes.

Whatever your leisure, may it be a pleasure!

We all love the Irish, and many of us rugby too.
Given the context of Covid, the Italians play on, but they cancel spectators (contagion risk).
The Irish, cancel the game, but welcome the spectators.
I expect Covid to jump 400% in Ireland next week.

Congrats to the Aquis Team.

Indian Central Bank may seek to defer the inevitable

EU Tax Havens.
This is a well laid out data set.

Delighted Spitting Image makes a return...
...with regular weather updates from our roving reporter Greta Thunberg

Good old bats. The ultimate incubator.

Friday, June 16, 2017

DLT Diamonds really are forever (now), Whitepaper, FCA, ASIC, Project Jasper and MND

It was a pleasure to see such a strong turn out for the City against MND Network. Congratulations to Dave Setters and the many sponsors and supporters. An impressive event at the always impressive grounds of the HAC.

It was also a pleasure to catch up with so many people at IDX. I was a little surprised that DLT was not as much at the forefront of the agenda this year....but there is plenty going on!

Another milestone this week for DLT in the commodity markets.
Singapore Diamond Investment Exchange Partners With Kynetix And Everledger To Trial First-Ever Blockchain Verification And Record-Keeping Service For Diamond Trading
(plenty of other wires carried this story - take your pick).

I've also put a paper together on what I think about the governance and adoption issues for DLT. There are so many generalisations out there that I thought it would be good to separate the generalisations and observations. Once these things are agreed, then you can really start to dive down into details and practical realities. The paper is available here. Obviously would love any comments and feedback. More than happy to qualify or justify any of my statements. 

I've also been doing some tweaking on my blogspot.
I've added a few tabs - some specifically on DLT.
Basically DLT Thoughts (why I don't like Bitcoin), DLT providers and DLT applications.
Always a constant work in progress, but hopefully a starting point. Again. more than happy to take on board any feedback or suggestions.

Well, Summer has arrived in force...and it is certainly evident on the cycle paths. Cycling continues to get strong take up in London which is great to see. Amazing to see so many clusters of bikes, at times it even makes me think of Holland!

Whatever your leisure, may it be a pleasure.
Great weekend all,



FCA DLT Consultation paper. (closes 17/July)
DP17/3: Discussion Paper on distributed ledger technology

ASIC’s Innovation Hub and our approach to regulatory technology

Canada backs off blockchain interbank payment system
Project Jasper: Are Distributed Wholesale Payment Systems Feasible Yet?

Stena bulk’s successful MIT Sloan project with blockchain.

IBM, Natixis and Trafigura team on blockchain platform for oil trades

CIBC, Commerzbank, Credit Suisse, ING and UBS Test Corda for Collateral Lending

Ethical Investing – Whose ethics are we talking about?
..."the options for ethical investing are largely limited to simplistic screening processes for pooled funds, such as blanket bans on firms focussed on profiting from activities such as alcohol, gambling, tobacco and fossil fuels."
...No investor wants to sink their money into a stock that’s worthy but ultimately worthless.
Environmental, Social & Governance (ESG) principles that are at the heart of the United Nations’ Principles of Responsible Investing.
*** I think this is a real opportunity for DLT. e.g. Screening 'Tobacco' companies is one thing, but do we really want to screen alcohol, fossil fuel companies etc. DLT provides a mechanism to evidence best practice in the supply chain, from production through to product placement. Just as alcohol can be consumed too it can be produced responsibly. DLT can add clarity where a blanket screen may not be best either for investors or the environment.

MultiChain 1.0 beta 2 and 2.0 roadmap.
[MultiChain was forked from Bitcoin Core]
...While Ethereum’s “smart contract” paradigm is popular, it has a number of key shortcomings for high-throughput permissioned blockchains. First, smart contracts introduce a global dependency across the blockchain’s entire state, which drastically impairs concurrency and performance. Second, smart contracts cannot stop incorrect transactions from being embedded in a blockchain, but only prevent those transactions from updating the blockchain database’s state....

What is also interesting are some of the Multichain partners (including): Accenture, Boston Consulting Group and pwc.

'Top 10' Blockchains Report Concludes: Now is the Time to Pivot
Platforms selected based on their potential to more quickly and transparently conduct post-trade securities settlement include Axoni, Chain, Digital Asset, Ethereum, Hyperledger, Nasdaq, R3, Setl, Symbiont and tØ.

Corp-up and venture builder models
“Corporate” and “Start-up”: big business in banking and insurance is coming after the start-up world with capital and intent – a powerful combination that we should not ignore.
Venture Builder: where corporates are building multiple challenger ventures on the outside, away from the internal corporate antibodies, driven by a team of seasoned entrepreneurs who have done it before.

Market Structure

European Commission - Press release
Mergers: Commission blocks proposed merger between Deutsche Börse and London Stock Exchange

FCA: Investment managers still failing to ensure effective oversight of best execution
We were concerned to find that most firms had failed to take on board the findings of our thematic review. The pace of change in improving client outcomes in best execution was slow, with few firms having a cohesive strategy for improving client outcomes.

Could the handwriting be on the wall for Bloomberg Tradebook?


The €60 billion Brexit bill: how to disentangle Britain from the EU budget.
Alex Barker: Policy Brief.
* The make-up of the bill is little understood, even by EU-27 countries. The €60 billion covers Britain’s potential obligations in three main areas: legally binding budget commitments that will be paid after Britain leaves; pension promises to EU officials; and contingent liabilities – such as bailout loans to Ireland – that would only require payments in certain circumstances.
* The most legally contentious relate to support for EU investment projects that will be paid for after Britain leaves. These liabilities come in two forms: project commitments that have yet to be paid; and structural funds promised to EU member-states, which will largely be turned into ‘budget commitments’ and paid for between 2019 and 2023.
* the settlement should be presented as ‘Brexit implementation costs’

Other Bits

How Machines Make Sense of Big Data: an Introduction to Clustering Algorithms
A closer look at 3 clustering algos.
*** I found this article quite insightful.

London has had a tough couple of weeks. But something about the British spirit just shines through:
e.g's Terrorism to the British is...
- Queue jumping
- Changes to your favourite biscuit
- The announcement every British football fan fears:..."and so we go to Penalties"...
- Debating how to pronounce words in your own language:..."I pronounce scone as scone"

Friday, March 17, 2017

Dash (for credibility), BTC Reddit, CSDR, TR, Redi...Cognitive Bias and Dunbars number

Been a while between blog posts. (Just pushing this out today - post already up on the web). I've been thinking about the format of blogging - are blog posts too long in this new immediate information age? Are posts too wide ranging - from DLT, Crypto, Securities, Brexit etc. On reflection, I'm just going to stick with what I'm doing (unless strong feedback says otherwise). Some people have said the blog is quite rich in content, good!, but why do I do it? I started blogging, selfishly, for me (at the suggestion of one of my email readers). I can't remember every story I read and link that piques my interest....putting it in a blog makes it more likely I'll rediscover that elusive article (hence there is a search function on the blog site, which allows me to search the blog rather than trawling through Google). If you have comments / feedback / suggestions about the blog / good or bad I'd be delighted to hear from you.

My blog site also has some pages / tabs. I've been doing some housekeeping and updating the DLT pages.

Ethereums and Dash's dash up the market cap rankings is impressive. Contrast this to BTC's performance and the Winklevoss ETF. For me, what differentiates these new comers is their Governance. Before we even get to the Tech, we need Governance (dispute resolution), Legal Framework (certainty and finality) and Regulatory Clarity.

Nice discussion thread on forking here - including comments by Vitalik.
Cryptocurrency trading volumes here:
Cryptocurrencies are now an asset class! Welcome Polychain Capital.

Exciting news (?). Alan Cameron is up for Global Custodian Person of the Year!
You can vote for him at this web site using the poll code 'gcpoty'.
He's got my vote.

I'll also be moderating at:
Marketforce’s 2nd Annual The Blockchain Summit
Moving beyond debate: putting the technology into practice
28th March 2017, Hilton Tower Bridge, Central London
I look forward to catching up any interested parties there.

Also did a recent DLT Q&A with the CommTech people here:
Congratulations to the Irish on their legacy of stopping two great teams on world record winning streaks: thwarting both the ABs and the English at number 19.
Current atrocities leave me speechless.

All the best on the blockchain!



Ethereum Sets Record Highs, $40 Price and $3.6b Market Cap
...cheer at community forums for the upcoming “Flippening” – the moment that Ethereum overtakes the place of Bitcoin in the world. They point to the technological and governance problems holding back Bitcoin from being used as an efficient payment system and to the many new solutions that are based on Ethereum coming out every day.

Hyperledger Continues Strong Momentum in 2017 with 11 New Members
The latest members include: Bank of England, Bitmark, China Merchants Bank, Federal Reserve Bank of Boston, Initiative for CryptoCurrencies and Contracts (IC3), Kaiser Permanente, Kubique S.p.A., MadHive, Monax, OSCRE and RadarWin Cyber Technology.

Blockchain: A Better Way to Track Pork Chops, Bonds, Bad Peanut Butter?

The Promise of FinTech – Something New Under the Sun? - speech by Mark Carney

DTCC Using Distributed Ledger Technology to Improve the Post-Trade Process.
DTCC announced that it has selected IBM, in partnership with Axoni and R3, to provide a distributed ledger technology (“DLT”) framework to drive further improvements in derivatives post-trade lifecycle events. The firms will work collaboratively to re-platform DTCC’s Trade Information Warehouse (“TIW”).
The solution has been developed with input and guidance from a number of market participants including Barclays, Citi, Credit Suisse, Deutsche Bank, J.P. Morgan, UBS and Wells Fargo, and key market infrastructure providers, IHS Markit and Intercontinental Exchange.
The end-state vision to establish a permissioned distributed ledger network, governed by DTCC, with peer nodes at participating firms.
IBM will lead the initiative, provide program management, DLT expertise, and integration services, and offer the solution-as-a-service. Axoni will provide distributed ledger infrastructure and smart contract applications, with R3 acting as a solution advisor.
Development is expected to begin in January 2017 and build on Axoni’s AxCore distributed ledger protocol which will be submitted to Hyperledger when the solution goes live, anticipated in early 2018.

DTCC is also working with New York-based startup Digital Asset Holdings on developing blockchain-based technology for the syndicated loans market.

The Global Blockchain Business Council (GBBC) was due to launch this week at Davos.


Blockchain Research Institute (BRI).
Don Tapscott and Alex Tapscott, co-authors of the best-selling book Blockchain Revolution are pleased to announce the formation of the Blockchain Research Institute (BRI).
Founding Members:
Technology Industry – Accenture, IBM, SAP
Financial Industry –  Digital Asset, NASDAQ
Global Corporations – Pepsico, Centrica, Liberty Global
Government – Province of Ontario, University Health Network
Blockchain Pioneers – Nuco Inc., Paycase, Artlery, Votem, Cosmos, Youbase, Wisekey
Affiliate Organizations – The Hyperledger Project, the Chamber of Digital Commerce,, Enterprise Ethereum Alliance

Bitcoin and Ethereum Exchange Coinbase Granted New York BitLicense
Coinbase, the San Francisco headquartered Bitcoin and Ethereum cryptocurrency exchange and wallet provider, has been granted a New York virtual currency license – commonly known as a BitLicense.  Founded in June 2012, Coinbase has issued 10.9 million cryptocurrency wallets, making it the dominant player in the US market. It also supports 45,000 merchants and 9,000 developer apps.

“Bitcoin Jesus” Roger Ver Suspended from Reddit.
Investing in startups including, Blockchain,, BitPay, Kraken, and Ripple, Ver contributed over a $1 million toward creating the bitcoin ecosystem over the past six years.
He has now been blocked from Reddit for referring to the real name of Bitcoin forum administrator “Theymos”. Ver was thus accused of an offense known as doxxing (exposing a private individual’s details) despite the fact that a simple Google search will return a number of sources with the real identity of the person behind the Theymos moniker.
Theymos has repeatedly been accused of employing very harsh censorship policies, crushing debates about how to reform the blockchain both on Reddit and on Bitcointalk.

Canadian Securities Regulators Adopt Rules for Over-the-Counter Derivatives Clearing
National Instrument 94-101 Mandatory Central Counterparty Clearing of Derivatives requires certain counterparties to clear certain standardised OTC derivatives through a central counterparty clearing agency, subject to exemptions set out in the instrument.
National Instrument 94-102 Derivatives: Customer Clearing and Protection of Customer Collateral and Positions is designed to protect a local customer’s positions and collateral when clearing OTC derivatives and to improve clearing agencies’ resilience to default by a clearing intermediary. The instrument includes requirements related to the segregation and portability of customer collateral and positions as well as detailed record-keeping, reporting and disclosure requirements.
NI 94-101 comes into force on 4 April, 2017 and NI 94-102 on 3 July, 2017.

China Passes New Cybersecurity Law

Japanese Giant GMO Enters Cryptocurrency Exchange and Trading Business
...the Ministry of Finance and the Financial Services Agency are considering the elimination of the consumption tax on cryptocurrency transactions by the spring of 2017, and if this is happens, the further spread of cryptocurrency in Japan is expected.

Russia’s central bank is continuing to grow its blockchain footprint, having announced the creation of a new FinTech association focused in part on studying the technology.

Market Structure

CSDR implementing measures published in the OJ
The following implementing measures which supplement the Regulation on improving securities settlement in the EU and on central securities depositories (the CSDR) have been published in the Official Journal of the European Union:

ESMA publishes first set of CSDR Q&A's

The European Securities and Markets Authority (ESMA) has put for public consultation future guidelines on the transfer of data between trade repositories (TRs)
[The 6 approved TR's : DTCC, KDPW, Regis-TR, UnaVista, CME TR and ICE TVEL]

AMF to Launch its ‘I See Why’ Surveillance System in Mid-2017
France’s financial markets regulator, the Autorité des Marchés Financiers (AMF), today said it will implement a new market surveillance system for the country’s financial market, dubbed the ‘ICY system’. The system was developed internally with the backing of IT company Neurones

LSE says no plans to move clearing operations after Deutsche Boerse merger

Thomson Reuters Completes REDI Acquisition
REDI will now operate as Thomson Reuters REDI.

UK’s Competition Appeal Tribunal Upholds ICE’s Mandatory Sale of Trayport


Virtu Offers $1.3 Billion for KCG to Create Trading Leader
Virtu Financial Inc. offered to buy KCG Holdings Inc. for as much as $1.3 billion, amid signs the high-speed trading industry is finding it harder to make money.
New York-based Virtu, which combined with Madison Tyler Holdings LLC in 2011, closed down 0.6 percent.
KCG was formed when high-frequency trader Getco LLC combined with the ailing Knight after a mishap with one of Knight’s trading algorithms cost the firm $440 million in 30 minutes.

Interactive Brokers Group Announces Decision to Cease Options Market Making Activities
Interactive Brokers Group, Inc. (NASDAQ GS:IBKR) announced that it will discontinue options market making activities globally, which are conducted through its Timber Hill companies.
Thomas Peterffy, Chairman and CEO, said, “Having initiated the first automated option market making operation in the mid ’80s, which grew into the largest such business on a global scale over the next 25 years, it’s been painful for me to see it deteriorating in the last few years. But we do not have a choice in this matter. Today retail order-flow is purchased by large order internalizers and joining them would represent a conflict we do not wish to have. On the other hand, providing liquidity to sophisticated, professional synthesizers of short-term fundamental, technical and big data is not a profitable activity.


ICMA response to the commission consultation on capital markets union mid-term review

Planning for Brexit - Operational impacts on wholesale banking and capital markets in Europe
AFME has commissioned a report from PwC, outlining the operational impacts and transformation challenges that Brexit poses to the provision of banking services in the EU [53pages]

Euro Clearing and Brexit - The Practitioners' View.
The paper suggests why it could be in the best interests of the EU for clearing of these products to continue outside the Eurozone and highlights 4 key findings...

Passporting appears to be out, which leaves the UK with a "Third Country Regime" status. Good explanation of the implications here.

Speech by the President of the Eurogroup, Jeroen Dijsselbloem, at The Future of Europe event, 24 January 2017

Upcoming Events

The Blockchain Summit
Moving beyond debate: putting the technology into practice
28th March, 2017.
Hilton Tower Bridge, London

Cognitive Bias

Back on the topics of blogs, getting Cryptocurrency / DLT news means reading a whole host of new sources....some of which I suspect are one or two man bands (and kudos to 'em). What's real news, fake news, regurgitated news?
I liked this blog post from Scott Adams - yes, he of the wonderful Dilbert cartoons:
Some Fake News:
As ever, it is often the comments that provide such great insight:
Scott's experience is an extreme example, but if you have ever had the media cover a story or situation that you know something about, you already know that:
a) they are typically too ill-informed to get the story right, 
b) they are looking to fit facts and quotes into the narrative that they decided on prior to arrival or within the first minute of investigation
c) they are not particularly bothered by a or b
"Everything you read in the newspapers is absolutely true—except for the rare story of which you happen to have firsthand knowledge." 
--Knoll's Law of Media Accuracy (Erwin Knoll, editor, "The Progressive")
"Early in life I have noticed that no event is ever correctly reported in a newspaper, but in Spain, for the first time, I saw newspaper reports which did not bear any relation to the facts, not even the relationship which is implied in an ordinary lie. ...I saw newspapers in London retailing these lies and eager intellectuals building emotional superstructures over events that had never happened. I saw, in fact, history being written not in terms of what happened but of what ought to have happened according to various ‘party lines’."
--George Orwell, "Looking Back on the Spanish War" (1943)
I don't know why people generalize the media like they do. It consists of a ton of different groups with different viewpoints, motives, and standards of quality. It's like saying all black people or all Hindu people are terrible. Some are. Some are awesome.
Some people take it seriously and do really good work and watch for their own biases while other people are clowns that crave attention and feel their job is to entertain and will debase themselves and anyone involved with them to get it. Sometimes those people exist within the same organization because it's hard to afford the good without the rage and/or self-righteousness clicks the clowns bring in.
“Briefly stated, the Gell-Mann Amnesia effect is as follows. You open the newspaper to an article on some subject you know well. In Murray's case, physics. In mine, show business. You read the article and see the journalist has absolutely no understanding of either the facts or the issues. Often, the article is so wrong it actually presents the story backward—reversing cause and effect. I call these the "wet streets cause rain" stories. Paper's full of them.
In any case, you read with exasperation or amusement the multiple errors in a story, and then turn the page to national or international affairs, and read as if the rest of the newspaper was somehow more accurate about Palestine than the baloney you just read. You turn the page, and forget what you know.”

Cognitive Bias Codex


Updated video clip from the Solent swim for MND.

Henry Thomas Buckle
Great minds discuss ideas; average minds discuss events; small minds discuss people.

Simon Sinek: How great leaders inspire action.
This was filmed in 2009...30 million views since.
He talks about the need for businesses (or individuals) to address the:
1. Why we do what we do.
2. How we do what we do (differentiate).
3. What we offer (product).
The nice hook here is he correlates these processes to the biology of the brain:
The outer brain / neo-cortex, responsible for language and rationalisation, he equates to the 'what'.
The inner brain / limbic brains, responsible for feelings like trust, loyalty and 'gut feelings', i.e. decision making, he equates to the why (passion and commitment) and how.
He also talks about the Law of Diffusion of Innovation (originally from 1962!) and metions both the tipping point for market penetration at between 15% and 18% and 'crossing the chasm' (Geoffrey More).

18 minutes.

Dunbar's number
By using the average human brain size and extrapolating from the results of primates, he proposed that humans can comfortably maintain only 150 stable relationships.'s_number

The modern military company became popularized during the reorganization of the Swedish Army in 1631 under King Gustav II Adolph. For administrative purposes, the infantry was divided into companies consisting of 150 men, grouped into regiments of eight companies.

The Space Shuttle and the Horse's Rear End
The United States standard railroad gauge of 4 feet, 8 1/2 inches derives from the original specification for an Imperial Roman army war chariot.

People and Space in Early Agricultural Villages: Exploring Daily Lives,

Community Size, and Architecture in the Late Pre-Pottery Neolithic

Friday, December 2, 2016

DLT: Noun, Adoption, R3, Sandbox, VMCH...Rupeee

Each time I set out to do a blog much more comes along. Anyway, time to turn thoughts back to adoption and governance.

1. DLT is a noun.
I enjoyed attending and moderating the DLT section of the Annual Clearing and Settlement conference. One takeaway I tried to give at the conference is that DLedgerT is a noun. A ledger is a ledger. It is a thing, a noun, it doesn't do anything. There are people claiming DLT will do all sorts of wonderful things. It won't. What it will do is allow things that are already being done to be performed much more efficiently.

2. Adoption of DLT.
I had the pleasure of 3 "fireside chats" with DAH, Paxos and Clearmatics. Each of them very real use cases. My observation on all of this is that DLTechnology is becoming commoditised. I don't mean the fabrics / chains, they are still very much evolving. I'm keen to see the new release of Hyperledger (and how Corda will dovetail into this) and see how Ethereum gets on. Regardless, of the technology, as we move from Proof of Concept to adoption we need legal certainty, dispute resolution and governance. So whilst we're becoming familiar with the technology just being 'an enabler' what is the critical overlay for adoption is governance. It comes as no surprise to me that we're seeing a flurry of legal position papers, each of they will be trying to position themselves as the legal certainty partner for adoption.

The models I see emerging are Vendor based (e.g. DAH working as a vendor to ASX where ASX leverage their existing legal framework for the process of adoption. Consortia based. Slightly longer lead time as the governance arrangements take time to put into place and then finally Strategic Partner.

Some of those papers:
Norton Rose: Can smart contracts be legally binding contracts?
Mayer Brown (Law firm) will present "Regulatory Approaches and Issues in Practice of Blockchain DLT in Financial Markets”.
EY: Blockchain: five profound legal impacts
Accenture files patent for editable blockchain...(Ummm, I don't think this is the right way to view privacy. I don't think they'll get a lot of value from this patent!)

3. R3 in the news (and on the street!)
Spoiler alert, dreadful pun intended. Every coin has two sides....I'm amazed that the funding status found it's way onto the web. When I started my DLT journey I had no idea of which sources of news to 'trust'. (I was anchored to traditional media - since then I've become(?) a twit / twitter'er). For as much as there is news of firms embarking on a different DLT fork, what is clear, is that everyonne is still in the game - some are just realigning their chips.

4. FCA Sandbox.
24 firms have been announced into the sandbox. Now, you may have different categorization to me but I thought it interesting to see where the use cases 'clustered'. Payment type cases are 25% (6), 'retail' interface applications 25% (6), another 25% (6) are not ready yet (so they're phase 2), and the balance is made up of 3 in Capital Raising, and One (yep 1) each in insurance, loans and Id.
5. ...and another thing...VMHC.
Sorry, I just wanted to have a rant about this. Variation Margin Hair Cutting has once again come to the fore. It enrages me! (Sorry, I know, who gets agitated about VMHC?). Anyway, this is the idea that once a CCP runs out of money / skin in the game they then start to pilfer funds from anyone that has a positive variation margin. i.e a profitable position. This is just stupid. What about the contagion risk of international markets and hedged portfolio books? Robbing Peter to pay Paul in one jurisdiction / asset class just compounds the problem. Yes, it's a G20 inspired regulatory remedy, intended to prevent the tax payer from bailing out the market. OK. I get user pays and I'm on board with that concept too. But really, VM? Surely IM would be a better instrument for this. VM is a blunt instrument not best suited for the job. Poor choice. Yes, I further appreciate this is a super Black Swam event where we're talking about the simultaneous default of at least 2 of the top clearing firms but that is still no justification for enshrining the wrong principle. Grrrr.

6. ...and finally, oh what to do with those rupees? Risk, in whatever form is like a stress ball. You strap down one avenue...and just as quickly another seam opens. The unintended consequence of a super well intentioned motive to squeeze the Indian Black economy...Bitcoin. And then we have the IRS demanding wallet details. I expect India will join the chorus.

Festive and season greetings to all. Time to get those Xmas decorations up!

PS. The piccie was going to be Trump and the remodeled HairForce One but the project managers dilemma made me smile.


Blockchain company R3 CEV has reduced the amount it aims to raise from bank members in its first large round of equity funding to $150 million from $200 million and is changing the structure of the deal, according to a person familiar with the plans.
R3, a New York-based startup that runs a consortium of more than 70 financial institutions, now plans to give bank members a 60 percent equity stake in exchange for the funding, the source said.
Initially, it aimed to create a new company providing shared services for the owners, who would get a 90 percent stake. R3 would have run this utility for 10 years and retained a stake in it.
Goldman Sachs Group Inc (GS.N) and Banco Santander SA (SAN.MC), both original participants, are not renewing their memberships and not investing in the deal, spokespeople said.
Updated w/ MS and NAB out.
Updated with amazing leak:
Opted-out: Banco Santander, Goldman Sachs, J.P. Morgan, Macquarie Group, Morgan Stanley, National Australia Bank, and U.S. Bancorp.

Only weeks after the execution of a hard fork to mitigate various DoS (denial-of-service) attacks, the Ethereum network and its developers are struggling to deal with yet another major flaw. This time, major issues in regards to smart contracts have emerged, which have rendered the efforts of decentralized applications in the Ethereum network purposeless

IRS Demands Records of 4.8 Million Bitcoin Users
The IRS (Internal Revenue Service), filed a petition in federal court seeking disclosure of all Coinbase US customer records over a three year period, 2013-2015.
“The government has not alleged any wrongdoing on the part of Coinbase and its petition is predicated on sweeping statements that taxpayers may use virtual currency to evade taxes.”

UK's Royal Mint, CME Group launch blockchain-based gold trading platform

R3's Corda's code will be contributed on Nov. 30 to the Hyperledger project - a cross-industry project led by the non-profit Linux Foundation to advance blockchain technology by coming up with common standards.

R3 Projects: Barclays Smart Contract Template (ISDA agreement).
This is a nice youtube clip demonstrating the Barclays ISDA agreement use case.

R3 has collaborated with the Monetary Authority of Singapore (MAS) to launch its first dedicated distributed ledger technology (DLT) Center of Excellence in Asia. The lab will be established at Lattice80 in the Central Business District (CBD) of Singapore.

Singapore’s Central Bank Wants Blockchain for 24/7 Inter-Bank Payments

Connecting digital islands in trade finance
Michael Vrontamitis, Global Head of Trade, Product Management, Standard Chartered, talks about the industry’s slow progress in digitalising trade finance.
** This piece was recorded at SIBOS '16. I think Michael does a good job and succinct job. Basically, Trade is a good use case as it has external drivers (i) price reduction in underlying commodities and (ii) reduced commodities demand and lower growth rates. However, a) you need to digitise trade, before you can digitise trade finance, and b) complexity of counterparties in the ecosystem with disparate approaches results in digital islands. He mentions some technologies: OCR, Cloud, AI, Algo's, Big Data...all of which I think are irrelevant until you get a DLT solution in place. Once you have the data addressed, then you can start to be creative.

Financial inclusion and the 'un-banked'

Singapore FinTech Startup KYCK! to use IBM Blockchain and Bluemix to aid customer onboarding process in financial institutions.

In traditional applied cryptography, security assumptions tend to look something like this:
No one can do more than 279 computational steps
Factoring is hard (ie. superpolynomial)
Taking nth roots modulo composites is hard
The elliptic curve discrete logarithm problem cannot be solved faster than in 2n/2 time
*** I love this. So much content out there and I am still naive in my crypto security and authentication journey. Even the sources alone are interesting. So, much in the GitHub and Reddit domains.

Your money's no good: rupee note cancellation plunges India into panic.
India’s rupee restrictions are boosting demand for bitcoin.

Market Structure

ESMA prepares for MIFID II Systematic Internaliser regime
The earliest mandatory deadline on which firms must comply with the SI regime, when necessary, is 1 September 2018

FSB: Essential Aspects of CCP Resolution Planning

Adding it all up: the macroeconomic impact of Basel III and outstanding reform issues
...the results suggest that Basel III can be expected to generate sizeable macroeconomic net benefits even after the implied changes to bank business models have been taken into account

Central clearing predominates in OTC interest rate derivatives markets
Central clearing predominates in the over-the-counter (OTC) interest rate derivatives markets but is less prevalent for other OTC derivatives, as the combined results of the BIS semiannual and Triennial surveys of outstanding OTC derivatives positions show.

Exchanges struggle to attract derivatives trading from OTC markets
xchanges have not won a bigger share of derivatives trading, according to the latest BIS Central Bank Triennial Survey of foreign exchange and over-the-counter (OTC) derivatives market activity. Since 2009, the trading of derivatives on exchanges has shown no trend, whereas their OTC trading has trended upward

ESMA has finalised its technical advice to the European Commission on aspects of future rules for benchmarks.
In particular: how benchmarks’ reference values can be calculated by using data reporting structures under existing EU rules such as MiFID II and EMIR; some of the criteria for deciding when third country benchmarks can be endorsed for use in the European Union (EU); and what constitutes making a benchmark figure available to the public.

CFR Policy Statements for Conduct in Operating Cash Equity Clearing and Settlement Services in Australia
The Council of Financial Regulators is today releasing two policy statements setting out Regulatory Expectations for Conduct in Operating Cash Equity Clearing and Settlement Services in Australia and Minimum Conditions for Safe and Effective Competition in Cash Equity Clearing in Australia.

ASX Welcomes Guidelines for Equities Clearing Competition
The ASX, which has been under pressure from trading firms to lower costs, has said it will decide by the end of 2017 whether a new blockchain-style system will replace its current method for clearing and settling stocks.

Post-Trade: From the EEC to Here


The creation of Credit Suisse (Schweiz) AG.
The new legal entity going live has involved the transfer of around 1.4 million clients into the new bank. Credit Suisse will reveal at a later stage the amount of assets transferred.
Local rival UBS established a new Swiss subsidiary in 2015.
Credit Suisse said on Tuesday it will dismantle its asset management unit into its private bank

KCG completes acquisition of Neonet

Kees van Dijkhuizen succeeds Gerrit Zalm as CEO of ABN AMRO

Cinnober Extends Clearing Capabilities, Launching New Subsidiary


Hacker holds San Francisco railway to ransom, demands 100 bitcoins

For those that doubt Global Warming, or it's more politically correct term: Climate Change.

US Jason Chaffetz Serves FBI Asst Director With Subpoena During Hearings

Dad turns 6-year-old son's drawings into reality... with slightly disturbing results


"Edison’s electric light did not come about from the continuous improvement of the candle"
Oren Harari

"If I had asked people what they wanted, they’d have told me ‘a faster horse’!"
Henry Ford.

I was actually searching for the Harari quote, which I found coincidentally I found in this 2009 blog post - which is still as true today. Impressive blog post to stand the test of time!