3 ms·
Can someone give me a decent explanation of how blockchain will speed up a securities settlement? E.g: Big Bank sells 200m of some bond to a hedge fund. Bond i
by retube 11y ago
Can someone give me a decent explanation of how blockchain will speed up a securities settlement?
E.g: Big Bank sells 200m of some bond to a hedge fund. Bond is actually "given up" to a third party who hold bond on HF's behalf. Appreciate there's a whole load of operational shenanigans that go into making this happen. Just not sure what, or how blockchains will help.
- zzleeper 11y agoNo clue. That's what Levine is always asking. Perhaps it helps in that you can rely on the blockchain if the counter parties fall? (although that's a big if)
- wmf 11y agoMaybe because it's not legacy code.
- cbeach 11y agoThere are usually several systems involved in a settlement, all run by different parties - the bank (broker), the custodian (which holds the certificate) and the counterparties that are trading. They all have representations of the same trade that are mostly out-of-sync, and reconciling these systems incurs delays. With the blockchain, none of these parties need necessarily trust each other, but all can share the same system which shows the current state of the transaction. All parties can observe a ledger that is distributed in real time. So they don't need any reconciliation steps anymore and all trades are "T0" (same day) settled
- amalag 11y agoRipple is working with banks on inter bank settlements and they are NOT using a blockchain. A consensus algorithm makes a lot more sense.