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Recording

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Minutes

1. Anti-Trust and Code of Conduct
2. Introductions
3. Natalia Garciagonzalez Business issues in the bond bookbuilding process

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• Kirthi K What is preventing banks to use DLT platform for this? Example of Symbiont and similarity with loan origination process. Lack of broad adaptation in the market, Tier 1 banks reluctant to collaborate with Tier 2/3 banks
• Kirthi K there has been a lot of work on this front but seems there has not been broader adoption. Kirthi reckons work on the settlement front, and post-trade work such as coupon payments. Natalia Garciagonzalez settlement and post-trade is even an area with much broader room to bring improvement and efficiencies
• Manivannan Pillai What is the typical investor order in terms on nominal? This represents the process for the institutional market, so minimum bond amounts are typically €100,000. Investor orders are as little as €1million but it is considered really small, as the average is more in the €25million range
• Kirthi K What is ALM? ALM refers to Asset Liability Management, the team that manages the balance sheet of the banks. ALMs are active in investing in the bond market, in Europe they tend to use ECB money and invest it in government bonds to improve their net interest income. This is different to a Trading book of an entity, the book that it is used to provide liquidity to investors or to hold proprietary positions. The classification of an investor is important because the issuer agrees with the banks on an allocation policy, which means what types of accounts are going to be treated "better", i.e. real money accounts/buy-and-hold investors will be prioritised in the allocation process compared to hedge funds or broker as they tend to sell the paper.
• Kirthi K how is the price established between banks for a new issue? Normally banks provide pricing indications separately and once the group of banks is formed they exchange views and form an opinion on the indicative price based on secondary levels, issue premium paid by recent transaction, investor trends, etc.
• Chris Painter Example of a corporate bond. Why is there need for intermediation in this process? Natalia GarciagonzalezNeed of an intermediary for the underwriting risk and provision of liquidity in the system 
• Junji Katto Would DLT democratize investor access? In theory it should but still would need to pass KYC requirements and compete with larger investor orders in the allocation process
• Chris Painter Maybe the problem is trying to fit DLT technology into the system and we should consider a new system, i.e. no intermediation and all the process (research, etc.) done in the Blockchain. What is preventing to operate in such a new system?Manivannan Pillai the lack of recognition of blockchain/smart contracts by courts, difference between activity in the primary and secondary market
• Manivannan Pillai Junji Katto Chris Painter  Seems DLT might not be the best technology to approach this despite it would bring efficiency to the process. 
• Kirthi K would circulate a few thoughts on this

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