CMSIG-Projects-Use Cases

Owned by stanislav.liberman
Last updated: Feb 27, 2020 by Kirthi KVersion comment
2 min read

Goals

This space will be used to aggregate, categorize, and discuss various use cases around applying DLT and Blockchain to Capital Markets, with specific focus  on various Hyperledger Projects.

We attempt to define "good" use cases here as the ones that are most appropriate for the technology and bringing the most benefits by using DLT over the existing infrastructure, systems, and processes.

Draft of categories (to be converted into a mind map graph):

  • Capital Markets
    • Exchange traded products
      • Trading - rarely applicable
      • Post-trade
        • Fungible products - well suited for DLT in clearing, settlement, and other post-trade activities (GiveUps, allocations, mark-to-market, fees, etc)
        • Non-fungible products - well suited for DLT in post trade activities like GiveUp, allocation, mark-to-market, fees, etc
      • Risk management
        • Margin calculations - typically, too heavy to be done of the ledger itself, but margin management may be a good fit
        • Other?
    • Over-the-counter (OTC) products
      • Deal negotiation - there is a manual process in many markets in this area
      • Settlement
    • Bond origination/issuance - use of DLT (smart contracts) for syndication process and settlement (commercial paper, bonds) 
  •  Regulation
    • Reporting
    • Oversight - ability to have a holistic view of a market or specific firm
  • Data and analytics

    • Use Kafka (data stream) push notifications for inferential statistics.

    • Use data hadoop for predictive analytics based on Machine Learning.





Special Instruments

Climate Change

The 2018 Sveriges Riksbank Nobel Prize in Economic Sciences was awarded to William Nordhaus for his work on integrating climate change into long-run macroeconomic analysis. Here is a study by the ECB on climate financing.

A SIG has been proposed for studying Climate Change and the dlts. More details will be posted.

The main point made in this study by the ECB is that Green Equity is a better predictor of long run outcome on climate change; debt being a lesser duration product, investors are not as sensitive to longer term threats and opportunities. ". We find that for given levels of economic and financial development, carbon emissions per capita are significantly lower in economies where equity financing is more important relative to bank lending."

Green Bonds

Green Equity

References

    • Cambridge University Judge School of Business: Enterprise Blockchain benchmark study-October 2019- Use cases on Finance have been called out. 2019-10-ccaf-second-global-enterprise-blockchain-report[1].pdf
    • Wharton article on use cases in Finance TL;DR - dreamers (decentralization as in public chains) vs. pragmatists who see broad applicability (change will be gradual but needs incremental advances) and then leave crypto-currencies alone for now school. Looking ahead, integration with law, regulation and governance will be critical. according to the pragmatists.


EEA Usecases

Telecom- not as relevant to Capital Markets- Maybe Use Case 4

Real Estate - Maybe more relevant