Same-Second ———————
Settlement Now ! istockphoto
With that comes greater systemic risk until we figure out a simple way to make sure that a buyer has the funds on hand ( again , “ know your counterparty ”) without having to offload risk with some kind of complex , structured contract . And the only way to avoid the need for securities insurance or off-loaded risk contracts is to demand same-second settlement .
Blockchain technology appears to have the potential to make this happen , provided there is the will to change .
Throughout the industry , blockchain has become the centerpiece of innovation , the topic of major board discussions and a “ must-do ” agenda item . It seems that if you haven ’ t yet made your blockchain-themed presentation to your board , bosses or employees , you ’ re way behind the times , more or less in the path of doom !!
So , we are adding our bit to the world of blockchain . Over the last twelve months , we at TCS have invested effort in understanding this technology , creating a sandbox environment to test out its potential and building a “ Distributed Ledger ” framework . We ’ ve tested out solutions for several use cases , including Issuer Data , Know Your Customer and Know Your Counterparty , and we ’ ve evaluated what these use cases would mean for the world of settlement .
Our earlier work on a “ Single-Touch Model ” for settlement ( See TCS BaNCS Customer Newsletter # 16 ) certainly came in handy . We are also conscious of the vintage landscape of various position-keeping systems , messaging platforms and a plethora of interfaces , along with the inherent operational risks of changing them quickly – making us believe in the need for distributed ledgers to coexist with legacy systems .
Many in the financial industry believe that the blockchain technology has the potential to speed up the time needed to securely clear financial transactions , to render intermediaries and data flows obsolete , and to deliver same-second settlement . Most financial institutions have some kind of internally-funded initiatives to this end , and some have invested in Fintechs and Insuretechs dedicated to the mission of blockchain .
Why the financial industry is so eager to disrupt itself ? It beats me . Yet the banker in me wants to be ahead of the game – to innovate by reimagining centuries-old practices to the advantage of our clients .
Our new offerings – # BaNCSDL and # DLGateway – will be launched shortly . These solutions will enable distributed ledgers and vintage systems to coexist , enabling financial institutions to manage a smooth transition to an integrated ecosystem . We are also looking ahead to the need for eventual interoperability among multiple distributed ledgers .
Welcome to the world of # BaNCSDL and # DLGateway . Hope to see you at Sibos 2016 , stand E10 . n
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