SFTS2019: The industry is moving towards a more open network
10 May 2019 London
Image: Shutterstock
The industry is moving towards a more open network if the proper privacy and protocols are in place, one speaker predicted when discussing the future market at the Securities Finance Technology Symposium.
Discussing the Securities Financing Technology Regulation (SFTR), the panellist explained that the regulation is highlighting the problem that many beneficial owners “are not comfortable having their identity disclosed by their counterparty, which is a big challenge that needs to be addressed”.
Turning to technology, the panellist said: “Distributed ledger technology (DLT) has a lot of opportunities and areas that can be addressed.”
“Standardisation is about having a standardised process where everyone on the network agrees on the right calculation of input. The results of that agreed upon process are always going to reach the same results.”
“Breaks go away because you are looking at a shared ledger and the processes that effects that ledger are shared.”
Another speaker said that they are pessimistic about DLT, suggesting “there are a lot of challenges to implementing it”.
“Think about how much effort there would be in trying to get everyone to that progress. There is also environmental concern around DLT—they are not efficient.”
The panellist added: “The network itself takes up a lot of powerful engines. I think the adoption rate of DLT will be slow.”
Another panellist echoed that from a securities lending point of view, “DLT is a great concept but what are the actual use cases that can add real value that cannot be done in a different way?”
“From a front office perspective, you have cryptocurrency and crypto lending, and one could think of doing securities lending over a distributed ledger, and that creates a lot of other problems.”
“It helps with the peer to peer but then how do you manage collateral and manage credit for example?”
“In terms of the middle office and back office, the real benefits are collateral mobility and for post-trade, real-time settlements or settlements on the ledger will need to change the role of the custodian today.”
Discussing the Securities Financing Technology Regulation (SFTR), the panellist explained that the regulation is highlighting the problem that many beneficial owners “are not comfortable having their identity disclosed by their counterparty, which is a big challenge that needs to be addressed”.
Turning to technology, the panellist said: “Distributed ledger technology (DLT) has a lot of opportunities and areas that can be addressed.”
“Standardisation is about having a standardised process where everyone on the network agrees on the right calculation of input. The results of that agreed upon process are always going to reach the same results.”
“Breaks go away because you are looking at a shared ledger and the processes that effects that ledger are shared.”
Another speaker said that they are pessimistic about DLT, suggesting “there are a lot of challenges to implementing it”.
“Think about how much effort there would be in trying to get everyone to that progress. There is also environmental concern around DLT—they are not efficient.”
The panellist added: “The network itself takes up a lot of powerful engines. I think the adoption rate of DLT will be slow.”
Another panellist echoed that from a securities lending point of view, “DLT is a great concept but what are the actual use cases that can add real value that cannot be done in a different way?”
“From a front office perspective, you have cryptocurrency and crypto lending, and one could think of doing securities lending over a distributed ledger, and that creates a lot of other problems.”
“It helps with the peer to peer but then how do you manage collateral and manage credit for example?”
“In terms of the middle office and back office, the real benefits are collateral mobility and for post-trade, real-time settlements or settlements on the ledger will need to change the role of the custodian today.”
NO FEE, NO RISK
100% ON RETURNS If you invest in only one securities finance news source this year, make sure it is your free subscription to Securities Finance Times
100% ON RETURNS If you invest in only one securities finance news source this year, make sure it is your free subscription to Securities Finance Times
