[ B U Y - S I D E C O V E R | C H R I S T O P H H O C K ]
a strategic standpoint looking what their needs could be in two-to-three or even five years . You don ’ t want to build a parallel infrastructure to the traditional assets we have in place , but instead combine what ' s possible going forward with distributed ledger technology ( DLT ).”
For Hock , the tokenised economy is too often oversimplified down to the trading of cryptocurrencies , which to him does not fufill the definition of currencies
“ In the future , you could have T + 0 settlement - so atomic or instant settlement - using these technologies .”
because of their volatility . The meme generation are the ones currently getting involved in direct cryptocurrency investments , he says . Instead , he finds that the world of DLT and smart contracts and their application in the middle- and back-office , settlement , and custody could be where the game-changing element lies for institutions .
“ In certain types of products when it comes to documentation , for instance for over-the-counter ( OTC ) derivatives , you could make use of smart contracts ,” adds Hock . “ We ' ve for years discussed the mandatory buy-in as a part of the CSDR regulation which has now – thankfully – been postponed after intervention from the buy- and sell-side . In the future , you could have T + 0 settlement - so atomic or instant settlement - using these technologies , avoiding for , example , counterparty risk .”
Regulation The contentious mandatory buy-in regime as part of the Central Securities Depositories Regulation ( CSDR ) Settlement Discipline Regime is just one of the fronts where Union , led by Hock , has been vocal and reactionary on behalf of the wider market .
“ In difficult-to-trade names , if broker-dealers knew they might run a potential risk of a mandatory buy-in which they can ' t deliver and might cost them millions of euros , they probably wouldn ' t want to make us markets and show offers anymore . The CSDR penalty regime will kick in in February next year and this will further reduce the number of fails . A potential mandatory buy-in would have minor positive effects on settlement discipline only , but massively negative effects on
44 // TheTRADE // Winter 2021