Central Clearing House (CCP), Central Securities Depository (CSD), Fund Settlement Bank, Securities Companies (Full-service broker) and other parties have many redundant jobs for reconciliation.
For securities trading, at the end-of-day, market participants have to conduct post-trading processes. Currently, clearing and settlement activities have involvement of many intermediaries and go through so many steps that causes redundancy. Clearing and settlement costs the financial industry a whopping $50 billion each year, according to consulting firm Oliver Wyman.
Applying Blockchain to these processes can help participants reduce workload, cost and counterparty risk in post-trading thanks to shared data and transparency of ownership.
- FPT proposes using Blockchain-powered securities trading platform
- FPT is responsible for Blockchain platform deployment & UI development.
- Using private Blockchain for customer info, securities ownership, cash balance to create more transparency between participants.
- Both securities delivery and fund payment come close to T+0 Settlement.
- Removed multiple intermediate steps.
- Reduced manually mutual reconciliation
- Reduced business, reporting and auditing costs as well as counterparty risks
- Using permissioned ledgers (private Blockchain)
- Issuing asset-backed tokens for stock symbols
- Inquiring data from Blockchain-based system to verify trading execution results before netting
- Requiring multiple-signature of all participants to finalize results of netting and settlement
- Processing both Securities delivery and Fund payment for a complete settlement
- Paying attention on reference authority