1. Introduction

Capital Markets are close to the ground zero of blockchain adoption: crypto-currencies, which were intended to ease the payment leg of remote transactions between parties. Crypto-currencies have since morphed into an asset class of their own. Creating credit, market analysis and forecasting for crypto-currencies has borrowed heavily from existing capital markets theory and practice. Distributed Ledger Technology (DLT) based capital markets based use cases and some production systems have been created. The advantages of DLTs, including creation of a mutual source of truth between parties that do not completely trust each other and automated business logic through smart contracts are drivers for adoption in capital markets. Appropriate levels of transparency between counterparties, traceability and ease of regulatory oversight are additional advantages. 

Enterprise adoption has run into multiple challenges: operational deployment at scale across multiple organisations, integration into existing enterprise infrastructure as well as two-way bridges to off-chain data sources are some.  Further, the change has to be implemented in a heavily regulated environment consisting of multiple stakeholders from a variety of functions like legal, IT security, compliance and third party risk control. It is the aim of the capital markets SIG to bring together practitioners from all affected functions to discuss various implementation aspects of the technology relating to Hyperledger based DLTs. This needs collaboration between business and technology. Both groups need to learn from each other as well as find common ground to solve problems. The mission of the capital markets SIG is to provide such a platform and a safe-space for surfacing solutions and challenges.    

1.1. Mission

The Capital Markets Special Interest Group (CMSIG) represents industry professionals working together to study how Hyperledger DLTs interact with capital markets use cases. Issuance and trading of instruments to continued market-making, management of risk, program-trading, standards, regulations, capital requirements, traceability, post trade settlement, custody including corporate actions for capital markets. This group also explores architecture, identity and performance related considerations specific to capital markets and DLTs. Business and technology professionals from the capital markets world come together in this SIG to discuss, brain storm and learn from each other. 

2. Special Interest Group Scope

2.1. In Scope

The scope of the CMSIG shall include:

• Identifying related proofs of concepts, current pilots, use cases and functional architecture in capital markets;

• Sharing stories of successes, failures, opportunities and challenges;

• Working with Hyperledger projects and Frameworks to learn from and provide feedback on solutions 

• Identifying conferences or other opportunities to connect face to face, as well as submit talks or present as a group at an event.

The CMSIG may form subgroups or task forces to support, emphasize, or promote any of those items listed above. For a further exploration of scope look at this link.

3. Projects

We work on documents, diagrams, presentations, implementations or road maps of our projects. For the current state of existing projects, as well as outputs please see this link. We elaborate on the on-going projects below.

As we collaborate, all output is made available in the open. For ease of discovery, this material is annotated and labeled with keywords for easy searching. If any code is produced, the output will be easily downloadable and open source. Documentation and deployment will be made as friction-less as possible. SIG members who are in touch with practitioner groups as well as working groups, the technical steering committee and other SIGs will either bring knowledge of methods and practice from such groups or push out our findings to these groups to create synergy in the Hyperledger ecosystem. 

3.1 Taxonomy

3.2 

4. Open Community

Hyperledger SIGs are open and global communities where anyone from anywhere can and should be able to participate, contribute, and access tools and information.  For example, this means that even with meetings that are held via teleconference, we have to involve those not on the calls who are online. Best practice in an open and global community is to keep in mind time zone differences of the group participants and make sure to include non-meeting participants in group discussions and decisions by active use of the mailing list, the wiki and Rocket Chat. All SIGs must adhere to the Hyperledger Code of Conduct and Anti-Trust Policy (see below) during meetings:

Anti-Trust Policy

Linux Foundation meetings involve participation by industry competitors, and it is the intention of the Linux Foundation to conduct all of its activities in accordance with applicable antitrust and competition laws. It is therefore extremely important that attendees adhere to meeting agendas, and be aware of, and not participate in, any activities that are prohibited under applicable US state, federal or foreign antitrust and competition laws.

Examples of types of actions that are prohibited at Linux Foundation meetings and in connection with Linux Foundation activities are described in the Linux Foundation Antitrust Policy available at http://www.linuxfoundation.org/antitrust-policy. If you have questions about these matters, please contact your company counsel, or if you are a member of the Linux Foundation, feel free to contact Andrew Updegrove of the firm of Gesmer Updegrove LLP, which provides legal counsel to the Linux Foundation.

4.1. Transparency

Meeting details, meeting notes, and documentation shall be made publicly available. The following items shall be generated and made available to the community:

• Wiki

• Mailing list

• Rocket.Chat channel

• Meeting recordings

• Github repositories (optional)

• Jira (optional)

5. Collaborations

This SIG will collaborate with other Hyperledger groups, Linux Foundation Open Source Networking, the TSC, Linux Foundation staff, and the project maintainers. The Capital Markets SIG is interested in collaborating with other Hyperledger and non-Hyperledger groups that aim to identify and share blockchain solutions that increase impact in global development.

6. Membership & Governance

CMSIG membership shall be free and open to members of the community who have an interest in issues as they relate to the SIG topic technologies in general, and blockchain technologies. SIG membership is established by subscription to the mailing list.. All participation in the groups activities is voluntary. It is perfectly fine to listen in to a group and do nothing. Of course active contribution is our goal, but it is not a requirement for membership. Anyone can propose agenda items, activities, and work products. In work products, the only requirement is there's enough buy-in from community members to want to volunteer to complete the product<<<No further edits accepted. It's being reviewed by Hyperledger team and will be published here when final>>>

Hyperledger has launched a Special Interest Group ("SIG"), the Hyperledger Capital Markets SIG, to facilitate focused technical and business-level conversations related to appropriate use cases for blockchain technology across Capital Markets.

SIGs gather community members from an industry segment to work on domain-specific problems and create an environment for open discussion, document co-creation and solution proposals. Hyperledger now has eight SIGs, including ones focused on healthcare, telecom, trade finance, supply chain and social impact.

Capital Markets are a way to connect investors and borrowers. Borrowers get access to capital and investors get returns from their investment. These returns can be in the form of dividends, coupon payments or appreciation of the instruments. The downside risk is default by the borrowers as well as the reduction in the price of instruments. Borrowers are enterprises or governments. Investors are individuals or public and private institutions. Capital markets are an important component of the economy.  Capital markets include  the bond market (the largest market) and the stock market. It can also include derivatives.

When invented, the Blockchain was aimed at global uncensored retail payments through the medium of a digital currency. The original solution has since evolved into a store of value and its exchange among participants in a safe, secure and transparent manner. Many Blockchain solutions have been created to cover issuance and transfer of digital assets, futures and other derivatives. This and other solutions feature capital markets infrastructure and processes. 

The Cambrian explosion of Blockchain solutions includes public permissionless to private permissioned. Many of these solutions are in the capital markets sector. Hyperledger houses the most diverse set of primary blockchain frameworks, utilities and libraries. The new SIG helps unify thinking and solutions targeted to capital markets in Hyperledger. In the spirit of the SIG, the CM-SIG is a forum where capital markets business experts and blockchain technical folks come together in a free and open-source manner.

The scope of the Hyperledger capital markets SIG:

• Draw out front to back taxonomy for generic capital market infrastructure with variations on specific product lines
• Impact of dlts and their place in the architecture (business, integration, infrastructure, regulation, market events, interaction between product lines) 
• Risk calculation and scenario analysis: analytical impact of Distributed Ledger Technologies ("DLTs") in pre-market, trading, hedging, day-to-day risk management, trading limits, FRTB,  
• Specific use cases, current pilots and proofs of concept, and production case studies with opportunities and risk; as well as solutions for the identified problems
• Cross-cutting architectural principles, performance and scalability, security, identity management, off-chain data, deployment and operation in regulated enterprises;
• Standards in capital markets for data in flight and at rest, events and responses, privacy in light of DLTs
• Conferences or meetups to connect face to face, submit papers, talks, presentations
• Interface with companion SIGs like Trade Finance or Supply Chain to draw out common areas of concern and interactivity of solutions
• Functional knowledge drawn from SIGs like telecom, best practices from  Social Impact SIG (SISIG) as well as the knowledge drawn from Architecture, Identity and Performance and Scale Working Groups

The new Hyperledger Capital Markets SIG, is led by the chair Vipin Bharathan, Founder dlt.nyc, a blockchain consulting firm, and vice chair Natalia Garcia, Assistant Director in Debt Capital Markets, and is comprised of more than 21 founding individuals from different locations, from diverse financial institutions. SIG membership and participation has grown since and is open to all. We have already had several audio calls and are involved in some projects that the community has found interesting.

The projects that we are currently engaged on are:

• Taxonomy, classifying the dimensions of capital markets, 
• Standards covering the different types of products
• Use cases, listing the prominent use cases- a draft taxonomy of use cases is available
• Challenges or obstacles that are common to DLTs and their application to capital markets use cases
• Regulations that apply to the various aspects of this highly regulated industry
• ROI of any particular solution, especially on intangible aspects like trust, transparency and decentralization in capital markets

Greater details on any one of these can be found through our projects page. 

CMSIG is aimed at working together discovering correlation between these projects to deploy actual solutions from the Hyperledger greenhouse inside capital markets.

You are welcome to volunteer for any of the existing projects. We also welcome new projects, especially if they are presented before the community and have a group of committed volunteers backing them.

Each SIG has an open e-mail list, a Chat channel, and a wiki page. Live meetings are also held regularly via web teleconference. When needed, a task force can also be created within the SIG and have working sessions to discuss specific work items.

If you’re interested in joining the Capital Markets SIG, please subscribe to the mailing list and join the Chat channel where meeting details will be announced. The wiki page of the SIG contains links to resources, findings, meeting minutes, project details and the active member directory. Find a list of all community meetings including the Capital Markets SIG on the Hyperledger Community calendar. We look forward to your active participation and valuable contributions.