The forefront of securities finance innovation
01 July 2020
Comyno unpacks its expertise in the areas of distributed ledger technology and highlights pragmatic and cost-efficient solutions for SFTR compliance
Image: Khakimullin Aleksandr/shutterstock.com
Comyno is a specialised fintech company with more than 15 years of experience in securities finance focusing on software and consulting. We work with leading private and public financial institutions, clearing houses and triparty agents, combining our expertise in strategy, processes and technology.
We have extensive experience in the provision of standardised and tailor-made solutions, increasing functionality and efficiency across the entire value chain. Our innovative strength is demonstrated by our expertise in the area of blockchain and distributed ledger technology (DLT) and its practical application.
What do we offer?
We offer a range of consulting services including, strategic, business analysis, technical and infrastructure as well as project and program management, and product architecture and design.
We have a variety of software solutions including a C-ONE securities finance platform: a suite built to deliver straight-through-processing for all securities finance business activities.
C-ONE connectivity, a standard connectivity to systems and providers in securities finance.
C-ONE SFTR regulatory reporting solutions customised software development and DLT/blockchain development.
Rich front-to-back, state-of-the-art suite of software modules
Increasing efficiency across the entire securities finance process and value chain has always been one of the industry’s main challenges, even more so within the fragmented and complex framework of most market participants. This has also been highlighted again in the recent period of increased market volatility.
Our C-ONE platform addresses many of these challenges. Essentially, it is a highly flexible set of modules that can seamlessly be integrated into existing legacy infrastructure. Its front end can, yet does not have to be used. This is a vital advantage for any market participant successfully operating with a legacy front office system.
Comyno provides various tools, such as C-ONE collateral, C-ONE trading, C-ONE risk management and C-ONE reporting, which can be easily expanded in a quasi plug-in-and-play manner, once the first component is established
(see Figure 1, overleaf).
C-ONE combines management technologies and data analytics tools into a single software suite with an intuitive and easy-to-navigate customised dashboard/cockpit. A dedicated data management platform, C-ONE connectivity, imports data from various systems and enables customers to view the data in a clear and concise manner. It effectively serves as a data warehouse hub with the ability to receive and send data.
This range of tools give our clients the ability to cover all securities finance related topics as efficiently as possible. They will be designed solely based on our clients’ respective requirements. A key role of the C-ONE platform is the collection of both structured and unstructured data from a range of internal and external sources and its subsequent integration and storage (see Figure 2, overleaf).
Furthermore, it provides a tailor-made hosted solution with front end, middle and back office functionality at a reasonable cost for our clients. With the adaptor based new platform technology, C-ONE does not need the programming and maintenance that is necessary for the broad range of other interfaces and existing in-house systems.
Pragmatic and cost-efficient solution for SFTR compliance
In addition to the recently added SFTR module, which is fully integrated into the C-ONE suite of systems, we developed C-ONE SFTRLite. The idea was to facilitate the requirements for companies which already have a strong database for its securities finance business and prefer a light technological footprint to meet the regulatory requirements or have the data spread across multiple systems.
Figure 1
Figure 2
SFTRLite was created to support customised data imports, validation and adjustment of the provided data and converting it into the required xml schema, so it is ready to be reported to a trade repository (see Figure 3).
A new dimension custody network using blockchain technology
Both parts of traditional securities finance transactions, principal and collateral, continue to be scattered across custodians and (I)CSDs, with significant issues arising from moving them quickly and efficiently from where they are to where they are needed. The current crisis reinforces the need for revolutionary technology.
Blockchains as one form of DLT have been seen as a potential solution. More specifically, the concept of blockchain based securities settlement has been floating around ever since blockchain, respectively DLT, has been around. That said, the reluctance by many market participants to challenge the established custody model has been underestimated. This explains to an extent why tokenisation using a blockchain based custodian has not gained any traction yet. We share the belief that the real viable solution is not tokenisation, but on-chain transfers and position keeping.
As Comyno was expanding its technological capabilities on blockchain and DLT over the past few years, we were well placed to get deeply involved in an initiative led by DekaBank, aptly named the Digital Collateral Protocol (DCP).
As indicated above, its key element is not tokenisation, but the creation of a common and joined settlement and custody protocol for the transfer of traditional securities. Crucially, it allows securities to be kept at their original custodian and CSD. This is achieved through the transfer of the settlement chain onto the DCP.
The settlement itself occurs within seconds directly between the participating custodians in a digital representation, exactly as they are today but without the physical settlement. We are convinced that this will be a breakthrough in terms of combining legacy settlement infrastructure and modern technology.
Figure 3
This in turn should lead to tangible operational and technological improvements and will hence free up resources for all involved stakeholders. The efficiencies lay in a multitude of areas bringing benefits from several aspects due to the fast and certain settlement:
Easy expansion of trading relationships through a scalable, transparent and unified settlement network.
Improved balance sheet efficiency due to reduced counterparty risk.
Reduced business risk due to increased settlement efficiency leading to reduced buy in risks and fines.
Increased operational efficiency by simple, instantaneous and straightforward settlement, hence decreased knock on effects across the process chain.
Reduced settlement costs due to a smaller number of intermediaries for international activities
The project is at an advanced stage, having successfully completed all stages through to an alpha version. The initial use case is position keeping and securities settlement, initiated by the securities loan and non-cash collateral transfer. In other words, the DCP is now close to being in a position to book a collateralised securities lending transaction. The first legally binding trade on the DCP is expected in the near future.
Discussions are held with a large number of leading international and European custodians on the operating model for the DCP, discussing potential legal issues and their solutions, as well as the feasibility to implement this on an international scale.
With all this already achieved and close to production, we’ve gone even one step further and already enabled C-ONE connectivity to integrate the DCP into the existing C-ONE technology suite and act as the interface into the DCP.
C-ONE incorporates total connectivity via a message bus facility to every internal and external system or third-party entity. It can be used to link the existing internal technology landscape to the new technology without building own interfaces into the DLT.
It needs to be emphasized that the DCP is an initiative with a shared goal for all securities finance stakeholders, and a win-win constellation for the most part. There has been widespread interest across the securities finance industry with the aim to get the DCP fully operational as soon as possible.
We couldn’t be more excited by the combination of forces and would be happy to engage in any form of dialogue to strengthen and extend the DCP network on a global basis.
We have extensive experience in the provision of standardised and tailor-made solutions, increasing functionality and efficiency across the entire value chain. Our innovative strength is demonstrated by our expertise in the area of blockchain and distributed ledger technology (DLT) and its practical application.
What do we offer?
We offer a range of consulting services including, strategic, business analysis, technical and infrastructure as well as project and program management, and product architecture and design.
We have a variety of software solutions including a C-ONE securities finance platform: a suite built to deliver straight-through-processing for all securities finance business activities.
C-ONE connectivity, a standard connectivity to systems and providers in securities finance.
C-ONE SFTR regulatory reporting solutions customised software development and DLT/blockchain development.
Rich front-to-back, state-of-the-art suite of software modules
Increasing efficiency across the entire securities finance process and value chain has always been one of the industry’s main challenges, even more so within the fragmented and complex framework of most market participants. This has also been highlighted again in the recent period of increased market volatility.
Our C-ONE platform addresses many of these challenges. Essentially, it is a highly flexible set of modules that can seamlessly be integrated into existing legacy infrastructure. Its front end can, yet does not have to be used. This is a vital advantage for any market participant successfully operating with a legacy front office system.
Comyno provides various tools, such as C-ONE collateral, C-ONE trading, C-ONE risk management and C-ONE reporting, which can be easily expanded in a quasi plug-in-and-play manner, once the first component is established
(see Figure 1, overleaf).
C-ONE combines management technologies and data analytics tools into a single software suite with an intuitive and easy-to-navigate customised dashboard/cockpit. A dedicated data management platform, C-ONE connectivity, imports data from various systems and enables customers to view the data in a clear and concise manner. It effectively serves as a data warehouse hub with the ability to receive and send data.
This range of tools give our clients the ability to cover all securities finance related topics as efficiently as possible. They will be designed solely based on our clients’ respective requirements. A key role of the C-ONE platform is the collection of both structured and unstructured data from a range of internal and external sources and its subsequent integration and storage (see Figure 2, overleaf).
Furthermore, it provides a tailor-made hosted solution with front end, middle and back office functionality at a reasonable cost for our clients. With the adaptor based new platform technology, C-ONE does not need the programming and maintenance that is necessary for the broad range of other interfaces and existing in-house systems.
Pragmatic and cost-efficient solution for SFTR compliance
In addition to the recently added SFTR module, which is fully integrated into the C-ONE suite of systems, we developed C-ONE SFTRLite. The idea was to facilitate the requirements for companies which already have a strong database for its securities finance business and prefer a light technological footprint to meet the regulatory requirements or have the data spread across multiple systems.
Figure 1
Figure 2
SFTRLite was created to support customised data imports, validation and adjustment of the provided data and converting it into the required xml schema, so it is ready to be reported to a trade repository (see Figure 3).
A new dimension custody network using blockchain technology
Both parts of traditional securities finance transactions, principal and collateral, continue to be scattered across custodians and (I)CSDs, with significant issues arising from moving them quickly and efficiently from where they are to where they are needed. The current crisis reinforces the need for revolutionary technology.
Blockchains as one form of DLT have been seen as a potential solution. More specifically, the concept of blockchain based securities settlement has been floating around ever since blockchain, respectively DLT, has been around. That said, the reluctance by many market participants to challenge the established custody model has been underestimated. This explains to an extent why tokenisation using a blockchain based custodian has not gained any traction yet. We share the belief that the real viable solution is not tokenisation, but on-chain transfers and position keeping.
As Comyno was expanding its technological capabilities on blockchain and DLT over the past few years, we were well placed to get deeply involved in an initiative led by DekaBank, aptly named the Digital Collateral Protocol (DCP).
As indicated above, its key element is not tokenisation, but the creation of a common and joined settlement and custody protocol for the transfer of traditional securities. Crucially, it allows securities to be kept at their original custodian and CSD. This is achieved through the transfer of the settlement chain onto the DCP.
The settlement itself occurs within seconds directly between the participating custodians in a digital representation, exactly as they are today but without the physical settlement. We are convinced that this will be a breakthrough in terms of combining legacy settlement infrastructure and modern technology.
Figure 3
This in turn should lead to tangible operational and technological improvements and will hence free up resources for all involved stakeholders. The efficiencies lay in a multitude of areas bringing benefits from several aspects due to the fast and certain settlement:
Easy expansion of trading relationships through a scalable, transparent and unified settlement network.
Improved balance sheet efficiency due to reduced counterparty risk.
Reduced business risk due to increased settlement efficiency leading to reduced buy in risks and fines.
Increased operational efficiency by simple, instantaneous and straightforward settlement, hence decreased knock on effects across the process chain.
Reduced settlement costs due to a smaller number of intermediaries for international activities
The project is at an advanced stage, having successfully completed all stages through to an alpha version. The initial use case is position keeping and securities settlement, initiated by the securities loan and non-cash collateral transfer. In other words, the DCP is now close to being in a position to book a collateralised securities lending transaction. The first legally binding trade on the DCP is expected in the near future.
Discussions are held with a large number of leading international and European custodians on the operating model for the DCP, discussing potential legal issues and their solutions, as well as the feasibility to implement this on an international scale.
With all this already achieved and close to production, we’ve gone even one step further and already enabled C-ONE connectivity to integrate the DCP into the existing C-ONE technology suite and act as the interface into the DCP.
C-ONE incorporates total connectivity via a message bus facility to every internal and external system or third-party entity. It can be used to link the existing internal technology landscape to the new technology without building own interfaces into the DLT.
It needs to be emphasized that the DCP is an initiative with a shared goal for all securities finance stakeholders, and a win-win constellation for the most part. There has been widespread interest across the securities finance industry with the aim to get the DCP fully operational as soon as possible.
We couldn’t be more excited by the combination of forces and would be happy to engage in any form of dialogue to strengthen and extend the DCP network on a global basis.
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