Great to see David E. Rutter, founder and CEO of R3, on CNBC’s Squawk Box this week, discussing his predictions for blockchain in 2020 and beyond.
Great to see David E. Rutter, founder and CEO of R3, on CNBC’s Squawk Box this week, discussing his predictions for blockchain in 2020 and beyond.
Traditional business models remain under threat across the full value chain as enterprise blockchain continues to gain momentum, according to R3 CEO & Founder, David E Rutter
His comments came during R3’s annual CordaCon event, attended by over 1,100 developers, business leaders and industry experts in the heart of London’s financial district. The event drew a significant increase on previous years.
Since inception four years ago, R3 has risen to become a key player in blockchain-inspired technology to enhance a range of business processes including trade finance, insurance and financial services. R3’s global blockchain ecosystem has now grown to over 350 companies.
Among the announcements at CordaCon included a strategic partnership with Accenture and SAP, for R3’s Corda platform to enable two of the tech industry’s major players to provide a real-time gross settlement token-based exchange, with instantaneous settlements to reduce friction throughout the transaction chain.
Mr Rutter added: “Traditional business models are under threat across the full value chain. We will see the continued convergence of traditional Financial Market Infrastructure and broker businesses such as SIX, NY Stock Exchange, and Nasdaq with the crypto exchange world, such as Coinbase and Binance. We’ll also see new players emerge and the nimblest will win.”
Many of R3’s early adopters were at the event to talk about the work they are doing on Corda—such as TradeIX with Marco Polo, CryptoBLK with project Voltron, The Institutes Risk Alliance, SDX, B3i and ABI Lab to name a few.
Mr Rutter is a financial services veteran, having served as CEO of ICAP’s electronic broking division, before forming R3 and US treasuries platform LiquidityEdge, in the process of being acquired by MarketAxess in a USD 150 million deal
Mr Rutter added: “Corda’s longer term product strategy includes delivering capability on settlement and value transfer because we fundamentally believe we are embarking upon the beginning of a ‘tokenization of everything’ era. Digital Assets or tokens will reimagine how value is moved and managed and will fundamentally change the nature of business.
“Security tokens are squarely now under the purview of the regulators and will fall under global securities regulation. I believe long-term success and sustainability of tokens must rely on compliance with key principles pushed by the maturing regulatory framework. We will need a strong, well balanced ecosystem, regulatory framework, innovative mindset, and know-how from existing market infrastructure, as well as the right enterprise technology.
“We expect to see further enterprise blockchain consolidation. A year or two ago there were dozens maybe more platforms aspiring to be enterprise blockchains and we are already down to two real contenders in Corda and Fabric, with many other still trying to make Ethereum work at scale with proper privacy protections.
“On Interoperability, as applications go into production the need for seamless interoperability becomes more evident, so the surviving platforms need a rock solid interoperability story. I believe what we call “business network operators” the solution providers and of course their customers know that there won’t be just one solution for say Trade Finance so being able to send obligations to other customers on other BNO becomes an absolute necessity.
“The second order of this would be interoperability between blockchains and I think I was first asked about this over four years ago and the story for me is the same. While I think that may be important over a longer time frame it’s not a next year crucial deliverable. And for us anyway we are just looking to further solidify our interoperability story and I am pleased we have been focused on this for some time now.”
R3 has reaffirmed its commitment to London, doubling the size of its London Wall hub to accommodate its rapidly growing engineering team. The extra space will also support an aggressive hiring plan to increase the company’s global headcount from its current level of 215 to nearly 300 by the end of the year. The firm’s roster of new hires will consist largely of software engineers, along with commercial and client-facing roles around the world.
This initiative is a cornerstone of R3’s rapid growth plans that include an additional engineering centre in a new city by the early of 2020. R3 is currently evaluating the best location for the second site and will make that selection in the coming months.
The expansion represents a strong commitment from R3 to London. London has gained a reputation as a global technology hub and last year, despite the ongoing uncertainty of the Brexit negotiations, attracted more Foreign Direct Investment than any other city. It was independently ranked as the top global fintech hub by EY and Deloitte and hosts over half of FinTech50’s leading fintech firms.
While enterprise blockchain is still in its early years, it is now being deployed by some of the world’s largest companies across sectors as diverse as healthcare, insurance, capital markets and global trade. R3’s Corda blockchain serves as the foundation for many of these initiatives, becoming one of the leading blockchain platforms for enterprise use. The growth of the engineering team will ensure that the hundreds of businesses who build their applications on Corda can continue to deploy blockchain solutions simply and successfully.
David E. Rutter, CEO of R3, said: “There is enormous opportunity for London post-Brexit. While there clearly remain some uncertainties, we believe the city is well placed and established to thrive in the coming years. That’s why we are confident in making this substantial long-term commitment now.
“R3 is committed to ensuring the technology underpinning Corda is cutting-edge. To continue to do this, we need the very best people. It makes complete sense to look to London as we further develop the ways that blockchain can be developed and deployed. As our software gains more use cases and across more sectors, we will be looking to invest further in top talent – London and elsewhere.”
Electronic US Treasuries (UST) trading venue, LiquidityEdge, has announced it experienced record trading volumes during February 2019.
On February 28, participants traded over USD 31 billion (single count) across both on-the-runs and off-the-runs. It also experienced a record week last month, with USD 101 billion traded between 21-28 February.
The surge in activity was due to the treasury auctions, calendar rolls and the record number of unique participants benefiting from the directed, disclosed model championed by LiquidityEdge. The flexibility in its structure allows clients to choose between one-to-one or many-to-many models, facilitating a combination of anonymous and/or disclosed streaming executable prices creating a bespoke order book for each participant.
This follows on from its record month in January, where it recorded average daily volumes of USD 16 billion, representing a rise of 250% from 2018. A recent Greenwich report referenced LiquidityEdge’s rapid growth and linked it to the rising buy-side interest in aggregating and trading via direct pricing streams
LiquidityEdge is the first US Treasury venue to genuinely challenge the existing market structure that resides between bifurcated D2D and D2C, taking market share from both the traditional interdealer exchanges and RFQ platforms. Since launch, over 100 clients have joined the system, with end users including primary dealers, regional dealers, asset managers, and hedge funds.
The company was founded in 2015 by Wall Street veteran David E. Rutter, who also set up enterprise blockchain firm, R3.
Nichola Hunter, CEO of LiquidityEdge said: “This trading data demonstrates that we are successfully challenging market structure and bringing about change in the largest global fixed income market for the benefit of participants. We expect our market share to continue to grow based on our deep customer pipeline and number of clients currently integrating into the platform.”
We are delighted to announce that Chatsworth client R3 has secured one of the largest ever Series A investments in the global fintech industry, raising USD 107 million from over 40 institutions across the globe.
R3 is leading a consortium of banks and other financial institutions working together to develop a new operating system for the financial services industry based on distributed ledger technology (DLT), which was borne out of blockchain – the infrastructure that enables the transfer of virtual currencies such as Bitcoin.
Chatsworth has handled global PR for R3 since its launch in September 2015. During the last eighteen months we have worked closely with the financial, business and technology media to raise awareness and understanding of R3’s unique approach and technology as it sought to grow its network of members and investors.
Drawing on R3’s team of expert spokespeople, Chatsworth positioned the company and its members as thought leaders in this revolutionary technological field, securing thousands of pieces of coverage including tier 1 outlets such as the Wall Street Journal, FT, Bloomberg, Reuters and the Economist. R3 is now widely seen as the leading voice on distributed ledger technology, with its spokespeople regularly called upon to provide expert commentary in the press.
The awareness generated by this coverage helped fuel the momentum to drive R3’s growth from a fintech startup with eight finance and technology veterans and nine bank members to a global team of 110 professionals serving over 80 global financial institutions and regulators on six continents.
This massive investment marks the next stage in R3’s evolution. Many of the world’s largest financial firms have come together not just with capital support, but with a robust commitment to work with R3 in developing foundational industry solutions that will be the building blocks of the new financial services infrastructure.
We look forward to continuing our work with R3 as they take distributed ledger technology off the drawing board and onto the trading floor.
In the long history of humankind, those who learned to collaborate and improvise most effectively have prevailed, says David Rutter, CEO of R3.
Darwin’s point holds true. Critical mass, momentum and co-operation are absolutely essential if we are to transform financial services and the communications and transactional framework we rely on.
This was our rationale for bringing banks together to jointly develop distributed ledger technology for the financial services industry from day one.
In R3 we have created a fast moving financial technology product company with an ownership structure which provides a balanced governance, combined with the leadership and stewardship of the best technologists in their respective fields.
The spaghetti junction of shared legacy infrastructure as well as individual front, middle and back office systems is testament to the resulting mess when banks disappear into development silos.
The overall cost of maintaining this legacy infrastructure is incalculable and there is risk around every corner, embedded into the old Cobol and Fortran code under the layers of many of those systems.
That is why we came together with an initial group of nine banks in September 2015 to create R3. A highly experienced and effective technology team was assembled and ready for action two months later.
Fast forward a year and there are now over 75 members of the R3 group – with two additions in the last week alone – working together on a diverse array of projects and developing technology to address some of the most serious pain points affecting the industry.
There is no secret. We hired the best, assembled and activated a powerful and engaged membership base and connected them together to leverage the network effect distributed ledger technology delivers.
Together, we have designed, built and launched Corda, the open-source release distributed ledger platform which will set the standard for this technology in global financial markets.
This is the only platform designed by and for its users and represents the world’s largest collaborative distributed ledger effort in financial services. It is unique and it is a landmark moment for the market.
Distributed ledger technology will have such phenomenally powerful network effects that it is hard to imagine serious institutions deploying base-layer ledger software that is anything other than fully and wholeheartedly open.
The response and engagement with Corda has been exceptional and only a few weeks after open sourcing the platform we have already had a vast number of contributions from the public developer community.
Amidst the excitement of the Corda roll-out, it’s hard to ignore the running commentary on the progress of our fundraising programme.
The motivation and accuracy behind some of the noise has sometimes been questionable, but such is the nature of working on such high-profile projects. It’s a complement to be discussed and we are very happy with constructive criticism, but better when the discussion is informed and accurate.
We have always expected the make-up of the consortium to change over time – our member base is so large and so diverse, it would be unrealistic not to expect some institutions’ priorities, resources and focus to travel in different directions.
We have new members joining the project all the time and some banks may choose to change the way in which they engage with us as we move forward, but the critical mass we have built over the last year means members can be confident they are investing in developing industry standard solutions that will be the building blocks of the new financial services infrastructure.
The financial institutions that have shown the vision to join R3 are by that very action ensuring the technology we adopt is built using common code and protocols, ensuring seamless interoperability and integration.
This is a direct hedge against the risk of replicating the disjointed infrastructure financial markets are forced to operate on today.
We remain focused on perfecting Corda and looking ahead to our objectives and deliverables for 2017 working together with our members.
We are on the cusp of a new era in financial technology, and over the next year banks will begin to reap the benefits that have been promised to them since the financial services industry recognized this technology’s potential to deliver efficiency, lower risk, security and cost reductions.
Let’s be clear: the power of distributed ledger technology lies in its network effect – and that goes for the build as much as the usage. The past few years were characterized by blockchain hype. Leveraging the combined power and expertise of our diverse and growing group of members, R3 will make 2017 the year of blockchain delivery.
Two top R3 executives featured on industry rankings in technology this week.
David Rutter, CEO of R3, and Richard Gendal Brown, CTO, appeared on the Institutional Investor Tech 50 and the Financial News Fintech 40 respectively.
David ranked at number 18 on this year’s Institutional Investor Tech 50 list, recognising the financial market acumen and technological sagacity that led him to launch R3 in 2014. The consortium now boasts over 55 institutions working with R3 to develop applications for distributed ledger technology in the financial services market which could change financial services as profoundly as the Internet changed media and entertainment.
Richard was named one the most influential people in the European financial technology sector for his work with R3, which includes overseeing the team of developers responsible for Corda, R3’s distributed ledger platform for financial services.