13th September 2021 > > Blockchain technology.

tl;dr

Blockchain technology is starting to revolutionise the back-office administration of the legacy financial system.

Market Snap

Market Wrap

Stocks starting the week on the front foot, but cryptos are simply treading water. We had a recent lengthy consolidation around this level for BTC. Perhaps we are still in that phase, and the temporary breach of $50k was simply noise.

Occasional Series – Michel Barnier and strange times

Michel Barnier, chief negotiator for the EU following the Brexit referendum in 2016, is standing in the 2022 French Presidential Election. In pursuit of this prize, Barnier has said:

“We must regain our legal sovereignty in order to no longer be subject to the judgments of the European Court of Justice or the European Court of Human Rights”.

Who knew that Barnier would become enthused by two of the key demands (the latter one not yet satisfied) made by Brexiteers?

He has also promised a referendum to approve a five-year moratorium on migration from outside the EU. This is likely to be a policy popular to the many people in France who voted for Le Pen last time out (34% in the second round), but it is a stance that not even the headbanging Brexit Party campaigned for in 2019.

Strange times, my friends, strange times.

Curious Cryptos’ Commentary – Commercial uses of blockchain technology

Cryptocurrencies are just one of many possible use cases for Blockchain technology.

The scope for standardising many legal contracts – conveyancing is the obvious example – is enormous. Using smart contracts and blockchain technology not only impacts on efficiency and speed when entering into legal agreements, there can be no dispute when exiting those agreements.

No work on the way in, no work on the way out, many lawyers are going to have to retrain.

Which should help relieve the current shortage of HGV drivers.

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The financial services industry is ripe for a blockchain technology revolution. The increasing take-up of electronic trading across most asset classes has had a material impact by reducing the back-office need for reconciliations and dispute resolution. Even so, there is still a vast amount of time, energy and money put into those activities.

Axoni has developed a blockchain known as Veris for the processing of equity swaps, a market with a notional of $3.6 TRILLION. As with all derivatives markets, the notional can be a little misleading, as there is an element of leverage involved.

Still, there is an awful lot of activity in this space.

Veris has attracted such market heavyweights as Citi and Goldman Sachs to its network. Now the world’s largest asset manager, BlackRock, is joining the party.

Carl Forsberg, head of OTC Markets at Axoni, had this to say:

“BlackRock will significantly improve the Veris network’s efficiency by driving adoption of standardised post-trade swap data models and workflows.”

If that sounds like corporate speak to you, you would be right. Industry insiders know that what he means is that reconciliations and trade disputes become a thing of the past when using Veris.

As blockchain tech grows ever more prevalent, banks will employ far, far fewer people in admin related tasks, freeing them up to do something more productive instead.