The Kalifa review: R3’s recommendations for the future of fintech

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Charley Cooper R3

R3 was one of a roster of fintechs that contributed to the Kalifa review – a set of recommendations outlined for the UK’s fintech community to grow and flourish in the years ahead. R3’s Managing Director, Charley Cooper, shares the recommendations that R3 put to Ron Kalifa, which helped shape the outcome of the review.

Policy and Regulation

We believe that the UK provides an innovation-friendly regulatory environment. As an illustration of this, the FCA’s Regulatory Sandbox has provided a helpful tool in supporting early-stage businesses, both as a piece of regulatory engagement and as a marker of development when attracting external investment. We recommend the establishment of similar constructs across various industries where regulatory concerns often give pause to potential innovators who worry their work will run afoul of current legal frameworks.

When we consider the development of a market around digital assets, the UK has not been as quick as other jurisdictions to encourage the market or conduct projects utilizing new solutions such as distributed ledger technology. Therefore, whilst government stakeholders have taken a sensible stance in allowing development free from overburdensome regulation, the UK has still lagged behind several European nations, most notably Germany and Switzerland, in the application of these technologies. The commitment by the Bank of England that their renewal of the UK’s real-time gross settlement (RTGS) system will include API-enabled DLT interoperability is a welcome step. However, we believe that when the government leads from the front and deploys new technologies for its own use, the private sector will take encouragement from that and view the UK as a more friendly market in which to launch and grow businesses.

The government and the central bank also lag behind the most advanced nations with specific regard to stablecoins and central bank digital currency (CBDC). Many of the most advanced work done on this topic has been done using R3’s Corda, a technology that is being developed and supported by engineers and scientists based in London. However, despite the easy reach of the technology and expertise to the UK, greater advances are being made by the central banks of Sweden (through the Riksbank e-krona project), France (Banque de France’s wholesale domestic and cross-border work), Hong Kong and Thailand (Project Inthanon-Lionrock), Canada (Project Jasper) and several more. Given the pounds’ role as a reserve currency and the UK’s strategic interest in staying ahead of the curve, this is reason for concern and an example of the UK not making use of the talent it has at its disposal.

It is not yet clear how the UK plans to adapt post-Brexit to address the gap left in the total addressable market now that reaching the European market will require overcoming additional administrative hurdles to access. Many of our partners have raised concerns that they will be forced to leave the UK in order to take advantage of growth potential in the European market. This will prove a hinderance in incentivizing companies to choose London when selecting the best jurisdiction for their public listing.

Skills and Talent

One of the key reasons why the UK has been so competitive internationally has been London’s ability to attract global talent. A significant percentage of our London-based staff were born outside of the UK but have made London their home. To ensure this continues. an efficient, clear, and stable visa system is essential.

In the immediate term, we valued the government’s position and early communication that Brexit did not affect the status of EU citizens already in the UK, and this has undoubtedly assisted us in retaining staff and satisfying short-term recruitment needs. In the medium to long term, the UK government’s strategic positioning and promotion of itself across the world will be a factor in attracting global talent to all our London office.

The developer community, in particular, can be highly mobile, meaning that the UK cannot afford to be complacent if it wishes to retain these highly skilled individuals. Indeed, this risk applies to both maintaining UK’s attractiveness to foreign-born individuals and avoiding a brain drain of British talent to the USA or Europe. Maintaining a vibrant and innovative FinTech sector will not be possible without this workforce.1

Investment

When we consider the growth path for companies in our partner ecosystem, we believe that the UK provides good opportunities for seed funding but observe that it can get crowded out by funding opportunities available in other jurisdictions at later stages, particularly Series A & B. Attracting foreign investment can be healthy for a company because it can be seen as diversification of funding and potentially a pathway to a new market. If the UK wishes to retain companies as they grow, we believe that it will need to ensure that a vibrant domestic capital market continues to develop.

Chatsworth was the first communications agency to focus on fintech. We’ve been building fintech reputations for 20 years, steering start-ups through launch, growth and onto corporate action, and protecting and enhancing established infrastructures.

Looking for intelligent, informed and connected fintech PR which delivers results and value?

Get in touch and let us help build your reputation and tell your story.

The Covid-19 crisis is an opportunity to build a ‘Blockchain Big Society’

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David E. Rutter

Chatsworth client and chief executive of enterprise technology firm R3, David E. Rutter, tells Financial News why a decentralised ledger is the key to self-sovereignty over personal data and the answer to digitising the public sector.

With high profile data breaches still fresh in the minds of the public and confidence in the government at an all-time low, it is unsurprising and not unreasonable that many people have little faith in their data being held by governments.

But, with the government on a quest to digitise the public sector and a potential increase in its guardianship over our data going hand in hand with that digitisation, how can the public sector go digital without governments wielding immense control over our data?

The answer is through a purpose-built enterprise blockchain platform that can tackle this challenge, David writes.

Through such a platform, data can be revealed only to those who have a need – and a right – to know. If deployed by governments, this technology could transform the way that individuals own and control their digital identity.

Read David’s piece here:  https://www.fnlondon.com/articles/the-covid-19-crisis-is-an-opportunity-to-build-a-blockchain-big-society-20200818?fnr=true  

Chatsworth was the first communications agency to focus on fintech. We’ve been building fintech reputations for 20 years, steering start-ups through launch, growth and onto corporate action, and protecting and enhancing established infrastructures.

Looking for intelligent, informed and connected fintech PR which delivers results and value?

Get in touch and let us help build your reputation and tell your story

Blockchain’s five ingredients of interoperability

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“There’s also a very special case of cross-blockchain interoperability… the case where the networks at each end of the connection turn out to be running the same platform. Intrachain, if you like.”

Richard Brown is Chief Technology Officer at R3, the enterprise software company supported by hundreds of banks, technology firms, regulators, trade associations and professional services firms. His team builds Corda, the world’s most advanced enterprise blockchain platform. What he doesn’t know about blockchain technology isn’t worth knowing.

Richard has long argued that not all blockchain platforms are alike and that the promise of blockchain technology is real with solutions which can eliminate huge amounts of cost, redundancy, error and needless reconciliation across entire business ecosystems, as well as opening up previously hidden new revenue opportunities.

But not all blockchain platforms are alike: Only some designs will be architecturally suited to the challenge. In his latest thought piece for Forbes, Richard takes his original five ingredients for interoperability and expands them to some real-life, tangible examples including the home buying process.

Read the full article here. As a reminder, here Richard’s five ingredients of blockchain:

  • We need integration with existing systems
  • We need to be able to initiate transactions on other networks
  • We need to be able to transact interchain with solutions on other technologies
  • We need to be able to transact intrachain with solutions on different deployments of the same technology
  • And we need to reduce buyer’s remorse by making it easy to interchange one underlying platform for another

Contour launches to digitize and modernize trade finance

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Today, a new independent global network to digitise and modernise the USD 18 trillion trade finance market has been launched under the new brand – Contour.

The launch follows a series of ground-breaking live pilots in 14 countries and a global trial with more than 50 banks and corporates, which reduced processing times for Letters of Credit by over 90%, from 5-10 days to under 24 hours.

Contour now moves into full commercialisation of its offering and has established itself in Singapore as a fully independent network and is inviting banks and corporates to join its beta network.

The business is backed by: Bangkok Bank, BNP Paribas, CTBC, HSBC, ING Bank, Standard Chartered, SEB, Bain & Company, CryptoBLK and R3.

Contour is built on R3’s Corda blockchain and retains the support and expertise of the R3 team. It is led by Carl Wegner, a trade finance veteran who joins following a successful tenure building R3’s presence across Asia.

The network is focusing initially on Letters of Credit (LoCs), which are issued between banks, typically across country borders. They serve as a guarantee for payments between two companies or entities who want to trade goods or services with each other.

The 400-year-old process for agreeing, issuing and tracking LoCs is largely manual, inefficient and costly. Each party must keep and verifying its own separate paper records, creating duplication and discrepancies.  Contour digitises LoCs on blockchain, helping banks and corporates save time and money by reducing old fashioned, duplicative processes.

While historically recognised as an excellent risk-mitigation mechanism, research by Contour reveals that 86% of participants consider traditional LoCs as over-reliant on paper, takes too long and is becoming ‘intolerable’ for both corporates and banks.

Carl Wegner, CEO, Contour said: “The opportunity cost in trade finance is huge. Trillions of dollars in commodities, products and services are transacted daily, but the sector is still characterised by slow, duplicative and expensive processes. Contour delivers a network where trusted information is shared in real-time, effectively digitising Letters of Credit across all users in the transaction.

“We are indebted to the community of banks and corporates who have collaborated with us to validate our solution which delivers genuine, measurable value as well as process improvement around Letters of Credit. With the launch, Contour is now available to provide a full commercial service to organisations looking to enhance their trade finance practices.

“We are now focusing on scaling the network with more banks, corporates and partners, and look forward to continuing to collaborate with our growing community.”

Click here to learn more about our blockchain-based clients.

David E. Rutter on CNBC’s Squawk Box

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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.

Click here to watch the interview

For more information about some of the great work we do for our clients, click here: https://www.chatsworthcommunications.com/work/

CordaCon 2019 – London event is packed out

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  • R3 momentum increases as ecosystem swells to over 350 firms
  • Annual conference attracts over 1,100 attendees
  • CEO predicts traditional business models and technology must change or face extinction

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.”

Mastercard partners with enterprise blockchain firm R3

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Payments giant Mastercard is to develop a blockchain-powered cross-border payments platform in partnership with enterprise-focused blockchain firm R3.

In an announcement on Wednesday, Mastercard said the two firms have inked a deal to “develop and pilot” the payments solution. It will initially be aimed at connecting faster payments schemes and banks backed by Mastercard’s clearing and settlement network.

The platform will be built on Corda Enterprise, the commercial version of the platform, as opposed to the open-source Corda Network, R3 told CoinDesk.

The partnership is planned to merge R3’s expertise at developing blockchain solutions with Mastercard’s existing payment systems and network. Ultimately, the firms hope the new platform will help tackle industry issues such as costly payments processing, liquidity management and a paucity of standardization and connectivity between banks and domestic clearing systems.

MasterCard and R3

R3 CEO David E. Rutter said:

“All institutions – large or small – rely on the ability to send and receive payments, but all too often the technology they rely upon is cumbersome and expensive. Cross-border payments can be a particular pain point. Corda was designed specifically for enterprise use cases such as this, and we look forward supporting Mastercard in bringing blockchain-enabled payments businesses across the globe.”

Citing its July acquisition of international payments firm Transfast as a boost to its network, Mastercard said the deal to utilize Corda Enterprise will further expand its capabilities in the payments arena.

The news of the partnership also comes just days after Mastercard joined the Marco Polo trade finance blockchain network founded by R3 and TradeIX.

Peter Klein, executive vice president of new payment platforms at Mastercard, said in the announcement:

“Developing a new and better cross-border B2B payments solution by improving worldwide connectivity in the account-to-account space is central to Mastercard’s ambition. Our goal is to deliver global payment infrastructure choice and connectivity as demonstrated through our recent strategic acquisitions and partnerships, including our relationship with R3.”

Chatsworth was the first communications agency to focus on fintech. We’ve been building fintech reputations for 20 years, steering start-ups through launch, growth and onto corporate action, and protecting and enhancing established infrastructures.

Looking for intelligent, informed and connected fintech PR which delivers results and value?

Get in touch and let us help build your reputation and tell your story

R3 doubles down on London as post-Brexit technology hub

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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.”

LiquidityEdge posts record trading volumes in February

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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.”

Harnessing the potential of blockchain for insurance in 2019

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Over the past couple of years, insurers have migrated away from their conservative image, leveraging several emerging technologies, including blockchain, to re-think their current business models. One of the most significant technologies leading this digital transformation, blockchain is streamlining back-office processes and systems – and heading into 2019, insurers are accelerating their deployment of the most innovative use cases of enterprise blockchain technology yet.

Laying the back-office building blocks

Insurance companies face a complex web of challenges in today’s market. Regulatory demands are piling up, fraudulent claims are commonplace, and the flow of data is ever increasing. Meanwhile, as digital technology permeates the financial services industry more broadly, customers expect a greater level of innovation than ever before.

Despite the growing demand for tailored products and services, insurers recognized that for transformation to be sustainable, it must begin in the back office. Legacy systems combined with patchwork solutions have perpetuated a closed-off information environment with data silos and resulting operational inefficiencies. Building customer-facing digital solutions on these crumbling foundations would have disastrous consequences.

That is why, over the past two years, insurers have been hard at work behind the scenes deploying cutting-edge enterprise blockchain platforms to overhaul and modernise their back offices. Integrating even just the foundational technology can have a huge impact on a company’s transparency, stability, and efficiency.

By taking the first step of moving its transactions onto a shared ledger, an insurer can potentially eliminate fraudulent and duplicate claims by logging each transaction in a decentralised repository. Instantly, an insurance company is able to verify the authenticity of a customer, policy or claim. This is a simple premise but a huge step forward for the industry.

In addition, with the rise of the Internet of Things (IoT) and connected devices, blockchain provides an efficient and secure way to manage, share and leverage an ever-growing amount of data. Purpose-built enterprise blockchain platforms like Corda overcome the challenges of traditional public blockchains by ensuring sensitive data is only shared with parties that have a need to see it in each instance.

The potential efficiency gains for both the insurer and the insured are dramatic. Consider, for example, a reinsurer, insurer, and broker consolidating their policy data and storing it on a blockchain – the underwriting and application process could be reduced from weeks or even months to near real-time, with no burden on each entity having to gather, reconcile and submit documents.

These core benefits of blockchain technology are now being realised across the global insurance industry, with forward-thinking initiatives such as the RiskBlock Alliance and [ITIC Geneva 2018 contributors] B3i leveraging the power of collaboration to drive adoption and deployment.

By moving to a model in which disparate parties such as insurers, reinsurers and brokers can share and store policy information in a cryptographically secure way, the industry has laid the foundations for the next phase of blockchain-enabled innovation.

A convergence of technologies

Insurers are acutely aware of the need to evolve in order to stay competitive, and streamlining market operations with blockchain technology is freeing up precious capital and resources previously spent on auditing and administrative costs.

Newly created roles such as chief digital officer and chief innovation officer are now commonplace across the industry, with firms vying to increase their market share by developing solutions that meet customers’ demands for innovation while increasing efficiency and profitability. Once data has been migrated to a blockchain platform, the potential to apply other technologies such as artificial intelligence (AI) to utilise this immutable, real-time information is vast.

Dynamic pricing is an example of an emerging blockchain-enabled innovation that benefits both the insurer and the customer, with broad-ranging potential across health insurance, car insurance, property insurance and beyond.

Taking the case of shipping insurance, advances in technologies such as AI and telematics enable insurers to access detailed, real-time information about a ship’s location, age, and condition. This means that if a ship enters pirate waters, its location data can automatically be updated on the blockchain and the insurer can make the necessary adjustments to its risk profile and policy pricing. The same applies to the inverse scenario – for example, if a ship is young, in good condition and doesn’t stray from safe waters. Now consider that the ship is transporting refrigerated cargo, which is also insured. How does an insurer know whether a temperature spike is taking place in a crate at sea a thousand miles from its destination that could potentially destroy the cargo? Thanks to telematics, sensors in the cargo containers can communicate accurate information about temperature, humidity, and atmosphere. This information can be updated in a smart contract on a blockchain platform in real time, enabling an automatic pay-out to the customer if the cargo is spoiled by high or low temperatures. This saves the insurance company time and money while providing the customer with a better experience.

Dynamic pricing also has huge potential in the health insurance space. Health insurers require a vast amount of information about a customer’s medical history and lifestyle in order to piece together a policy, and provision of false or inaccurate information is commonplace. Blockchain enables insurers to accumulate data from multiple verified sources with updates occurring in real time, allowing them to carry out more frequent risk assessments and customise pricing accordingly.

Usage-based insurance (UBI) is another innovation currently reshaping the car insurance industry. Many cars now come equipped with connected features or advanced driver-assisted systems, which are having a profound impact on the way auto insurers handle policies.

Traditionally, car insurance policies have been based on driver characteristics like age, personal information and accident history. With UBI, insurers are able to incorporate driving behaviour data such as speed and hard braking that is updated in real time on the blockchain. In addition, telematics technology in the car can measure the time a driver spends on the road each day, opening up opportunities for pay-as-you-drive insurance policies that incorporate this data into a smart contract.

A digital future

These developments would be innovative in any sector, but when you consider that the processes underpinning the insurance industry have remained largely unchanged for hundreds of years, the evolution is even more dramatic.

By harnessing the potential of blockchain to tackle back-office challenges head-on, insurers have made the necessary investment to position themselves to take advantage of the myriad of opportunities and further efficiencies that blockchain – and its convergence with other new technologies – will deliver over the coming years.

Security tokens: the third blockchain revolution

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Away from the mania of last year’s ICO gold-rush, the appeal and benefits of raising capital by issuing debt and equity on a blockchain-enabled marketplace has struck a chord in the institutional financial services world. As momentum builds among some of the biggest names in finance, we will soon see properly regulated tokens, fit for real businesses and sovereign entities, writes R3’s Todd McDonald.

2017 saw a huge boom in companies raising money by issuing their own digital currencies, a process that has become known as an initial coin offering, or ICO. Holders of these coins or ‘tokens’ are then able to freely trade them on online crypto exchanges.

ICO activity skyrocketed almost overnight, and by the end of 2017 start-ups had managed to raise a total of more than $5.6 billion. Not bad for a market that barely existed a year earlier.

The potential for quick returns attracted a lot of investors, especially inexperienced retail investors spurred on by stories of crypto-millionaires. As might be expected, the risks associated with these investments were not always fully understood. There have been countless instances of scams, fraud or outright Ponzi schemes, which would be seen as comical except for the fact that it put ‘other people’s money’ clearly at risk.

Unsurprisingly, the amount of money pouring into the sector means regulators are appropriately increasing focus on token issuance projects, particularly in the United States. This, combined with a steep decline in deployable money from cryptocurrency speculation, has led to a clear cooling off period for ICOs.

However, the benefits of a decentralized issuance and transaction marketplace and smart securities contracts have clearly captured the attention of institutional players. 2018 has seen increased focus on security tokens, which offer the promise of spurring a new, lower friction method of asset and capital formation. These ‘enterprise-ready tokens,’ if developed appropriately, could automate or simplify much of the asset origination, issuance, execution, and secondary trading processes that makeup so much of investment banking fees today.  Issuers of securities everywhere see the value in a more efficient, effective connection to those looking to allocate capital, all in a safe, regulated and automated environment.

If bitcoin represented the first blockchain revolution and the emergence of enterprise blockchain platforms represented the second, the creation of a new global capital market powered by enterprise security tokens will usher in the third.

Putting assets on the chain

The first instances of these new enterprise token will likely focus on what is called asset-backed tokens. Put simply, the digital token represents an asset that is held ‘somewhere else,’ often at a regulated custodian. The token acts as a ‘digital twin’ and can be traded or exchanged freely on a blockchain with settlement finality, while the underlying asset remains blissfully in place at a custodian.

This interplay of a regulated custodian linked with an on-chain digital representation, while seemingly straightforward, unlocks new ways for markets to transact and expand. It offers a way for businesses to begin to iterate and implement enterprise-friendly yet novel digital assets, all from a strong foundation of an accepted regulatory base.

Building the token ‘buy-side community’

Both emerging and established financial infrastructure players are currently developing solutions to enable the issuance and secondary trading of these asset-backed tokens.

If tokens are to become credible and useful instruments in the institutional world, the quality and type of investor they are able to attract must also be considered. For example, when companies embark on a capital raise, whether it is a Reg D placement or full blown IPO, they (and their investment bank partners) seek ‘strong-hand’ investors – those that aren’t in it just for a quick profit.

The same will apply in the future for companies issuing their debt or equity as tokens, and as such, they will seek out platforms that give them access and distribution to a buy-side of proven investors.

Corda: the natural home of security tokens

R3 is uniquely positioned to facilitate the emerging ‘token economy’ in a secure and regulated manner. The same enterprise-ready focus that led to the design and capabilities of our Corda platform can be extended to bringing the best innovations of the ‘wild west’ of the token world to the enterprise.

Corda was designed from inception to solve the problem of how to represent real-world agreements on a blockchain in a canonical and enforceable way, and this approach can be directly applied to security token issuance. Financial agreements on Corda take the form of smart contracts, linking business logic and data to associated legal prose in order to ensure that trades executed on the platform are rooted firmly in law.

Other key considerations for security token issuance, such as identity, security, data privacy, and settlement finality, are already handled elegantly by Corda and have been key drivers in securing its position as the blockchain platform of choice in capital markets.

Corda-based token examples actually emerged back in 2016, when we began a collaboration with Bank of Canada, Payments Canada and others under the name Project Jasper, where a token called CAD-COIN represented collateral held by the central bank. Since then, we have seen pilot and production examples from our partners, in particular from HQLAxin securities lending and Tradewind Markets in gold trading.

Connectivity with the established financial services community also differentiates Corda from any other platform in the space. R3 is already in talks with a number of major market infrastructure providers about creating regulated environments for security tokens, underpinned by Corda, and the 200+ member ecosystem includes most of the biggest names in financial services, giving token issuers access to a vast network of high-quality investors.  Corporates, banks, asset managers, and market infrastructure providers are also crowding in to provide a stable, regulated settlement asset on Corda.  Corda’s unique design supports delivery of digital security tokens against payment in digital cash instruments in a single, atomic transaction.  This will reduce time, cost, and perhaps most importantly, risk in the emerging token-enabled credit market on Corda.

Platforms like Corda provide the catalyst and foundation to enable security tokens to become a new and potentially invaluable tool in the capital markets toolbox. Unregulated ICOs provided the inspiration for this next wave, yet the shift is already underway to make tokens enterprise-grade. The third blockchain revolution of digital assets will arguably be the most important and impactful to date.

R3 Ledger

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The Corda development community continues to build awesome new CorDapps harnessing the best of Corda. Do check out the latest addition, Parnika Sharma’s (BCS Tech) property listing CorDapp which showcases the power of an RDBMS running on a distributed ledger. We’ll be adding this to the growing list of Corda samples soon.

Meanwhile Corda 4 and Corda Enterprise 4 is taking shape, and a sneak peek at the content reveals a host of compelling new features and further improvements to the developer experience: contract constraints are a part of how Corda manages application upgrades and we’re adding the ability to constrain to any attachments signed by a specified set of cryptographic keys. 

This is an easier constraint method to use and requires less choreography between node administrators; support for multiple Corda nodes behind a single firewall, part of the strategy to reduce hosting costs; hardware security module support for safeguarding node cryptographic keys; a more consistent developer experience across the code (for example, error logging and the command line interface); improvements to the administration of a node’s membership to a Corda network, and – of course – we will be maintaining our high bar for the standard of documentation with further improvements to make it better than ever.

Bootcamp

Image result for corda bootcamp

R3’s Corda developer relations team is back on the road! Building on their massively successfully Bootcamp events held in major cities around the world earlier in the year, the team will be stopping off in more global locations in October to help you learn more about (and get the most out of) Corda.  Do take a look at the list of Bootcamps in the Upcoming Events section below to register for your nearest city and join our Corda experts for a no-cost evening of hands-on training, where any developer can arrive with their laptop and leave with a CordDapp.

Partner Spotlight

Corda

 Corda Enterprise Blockchain is now available on AWS! This Quick Start automatically deploys a Corda Enterprise node in a new or existing virtual private cloud (VPC) on the AWS Cloud in about 30 minutes. Corda Enterprise on AWS is a production-ready implementation of a Corda Enterprise node, which offers built-in resilience and high availability and which can scale as the needs of the node operator change. This partnership opens up CE availability to AWS’ 55,000+ partner network. Read all about it here.

R3search Rollout

Corda

In energy, R3 responded to the US Senate hearing regarding the energy efficiency of blockchain technology. The article in Brink, “Bitcoin is a Red Herring in the Discussion of Blockchain Energy Efficiency”, found that blockchain could aid the integration of smaller suppliers into the energy grid and enable provenance tracking of renewables.

We now have 18 public papers available for download, written by authors such as Vitalik Buterin, Ian Grigg, JP Koning, Rodney Garratt, Neepa Patel, and many other blockchain thought leaders! In capital markets, R3 Research has privately published “Building Blocks for Better Compliance: Can Blockchain Decrease the Burden of Financial Regulations?”, which focuses specifically on the recent MiFid II regulation in Europe. Members can access private papers here.

Life in the Fast Chain

Corda

Have you listened to our blockchain podcast yet? Check out our latest episode (online, iTunes, Spotify, Google Play, Overcast, etc) with Impact Chain Lab’s CEO and co-founder, Aishwarya Balaji. Aishwarya comes on to discuss how she got into the blockchain space, her company’s goals, their new project Bystander, and more.

If you haven’t listened to our last special, check it out! This special episode features R3’s Mike Hearn who talks about the Corda platform, the Corda network, his vision for the future of Corda and the potential future intersection of the blockchain, IoT, AI, and other emerging technologies.

To stay tuned, be sure to check out the podcast on your favorite app! 

Corda Certification

Corda

Certification can be obtained by passing the Corda Certification exam with a score of 75% or better. If you have attended a Corda developer training session or have equivalent experience, you should be well-equipped to take the exam with some additional independent study.

Developers who pass will receive an invitation to claim a digital badge that can be shared on social media and with the developer community at large.

Ready to take the exam?

CordaCon – live from London

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R3’s annual flagship conference kicks off this week in London, bringing together hundreds of developers, business leaders and blockchain engineers.

If previous years are anything to go by, the content will be fantastic – real examples, real case studies, knowledge sharing for developers, issue analysis and discussion and engaging presentations.

CordaCon provides a unique opportunity to meet and hear from R3’s clients about how they are leveraging Corda to solve real-world business problems.

Taking place over the course of two days with separate tracks of content – Developer Day (DevDay) and Business Day (BizDay) – it includes senior leaders from financial institutions, corporations, insurance firms, technology firms, independent software vendors (ISVs) and more.

The event, now in its third year, has consolidated its reputation as the fulcrum event for professionals working to apply blockchain-inspired technology to their sectors.

This is in part due to R3 having attracted a critical mass of members and partner, but also because the team’s approach was right from the start.

Rather than build an off-the-shelf blockchain solution and take it to market, R3 worked tirelessly to bring together the leading thinkers from their respective markets with the best developers and software engineers.

The resulting technology, Corda, was launched earlier this year and dozens of CordApps are being developed for it.

Such was demand that this year’s CordaCon was oversubscribed several times over. R3 and Chatsworth will be live tweeting from the event and sharing content and updates as they arise.

Look forward to seeing you there!

R3 Wins Best DLT Tech Provider at Central Banking Global Awards

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Yesterday, the inaugural Central Banking Fintech & Regtech Awards were held at the stunning Marriot Tang Plaza Hotel. We were very proud to see R3’s Anthony Lewis in attendance to pick up the award for the Best Distributed Ledger Technology Provider.

The new awards were held to recognise innovation in financial and regulatory technologies that were changing the way central banks and supervisors work.

R3 was picked from a strong contingent of blockchain/DLT based companies that are revolutionising the financial sector due to their transformative success in the past year.

The startup is currently engaged with Bank of Canada inside ‘Project Jasper’, an initiative which sets out to develop an interbank domestic payments settlement system, already the proof of concept touted ‘significant benefits.’

In March, HQLAx and R3 completed the first live securities lending transaction on the Corda platform – between Credit Suisse and ING. The transaction showed that using blockchain could help make the securities lending process faster and more capital efficient.

Corda’s success is evident not only by the number of institutions that use the ledger but also by those looking to invest in the technology. The company has raised over $122 million from more than 40 institutions, including Bank of America Merrill Lynch, HSBC and CLS.

In July, Corda Enterprise was launched to meet the demands of modern day businesses, especially complex institutions. With the launch, companies can now select a version of Corda that fits their unique needs – regardless of their industry, size, and stage of development. This means a wider range of institutions can realise the full potential of blockchain – executing complex logic and exchange of assets directly, simply and in strict privacy, without the need for costly reconciliation or a trusted intermediary.

We are proud to see R3 be continually recognised at the forefront of blockchain development in the financial market as we see the world begin to open their eyes to the potential of this technology.

Chatsworth delivers opening keynote at London FinTech Week

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To Westminster, where Chatsworth’s CEO Nick Murray-Leslie was the opening keynote speaker at this years’ London FinTech Week.

 The event brought together the best and brightest FinTech firms, individuals, developers, and entrepreneurs.

 FinTech is a truly global sector, with focussed hubs developing in both developed and emerging markets.

Nick’s speech focused on London as a FinTech hub, how London had gained traction as a global fintech hub and what it must do to retain that critical position, from attracting investment and venture capital, the talent pool, expansion opportunities and the impact of Brexit.

He also introduced Richard Brown, CTO of R3 for a deep dive into how a major banking technology consortium chose London for its technical and operational HQ and how the city’s talent pool and unique position in the intersection of finance, timezones and continents contributed to its success.

R3 launches Corda Enterprise with world’s first blockchain firewall

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This week Chatsworth worked with R3 in New York and London on the roll out the much-anticipated enterprise version of its Corda blockchain platform for businesses.

Corda Enterprise has been specifically optimized by R3 and its ecosystem to meet the demands of modern day businesses, especially complex institutions.

With the launch of Corda Enterprise, companies can now select a version of Corda that fits their unique needs – regardless of their industry, size, and stage of development. This means a wider range of institutions can realise the full potential of blockchain – executing complex logic and exchange of assets directly, simply and in strict privacy, without the need for costly reconciliation or a trusted intermediary.

Corda Enterprise includes the world’s only Blockchain Application Firewall, which enables the platform to be deployed inside corporate data centers while retaining the ability to communicate securely with other nodes anywhere else in the world. This is a critical requirement for many businesses when selecting a blockchain platform.

Corda Enterprise unlocks new opportunities for R3’s partner firms to expand their business, deliver new products to market faster and transform the industries in which they operate. Applications developed by partners such as Finastra, Gemalto, Guardtime, GuildOne, TradeIX and Tradewind Markets are now live on both Corda Enterprise and Corda, serving a rapidly growing community of end users in sectors as diverse as insurance, healthcare, shipping and financial services.

The launch of the platform is a watershed moment for business blockchain technology, and we are excited to continue supporting R3 as Corda Enterprise gains widespread adoption in markets across the globe.

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Chatsworth was the first communications agency to focus on fintech. We’ve been building fintech reputations for 20 years, steering start-ups through launch, growth and onto corporate action, and protecting and enhancing established infrastructures.

Looking for intelligent, informed and connected fintech PR which delivers results and value?

Get in touch and let us help build your reputation and tell your story

R3 named Best Blockchain Initiative of the Year at Financial News Awards

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R3 took home the ‘Best Blockchain Initiative of the Year‘ award at last night’s Financial News Trading & Technology Awards at the V&A in London.

The awards set out to celebrate the success stories of trading and technology firms operating in, and supporting, financial markets over the past year.

And it’s fair to say that the past twelve months have been very good indeed for R3. Its global network more than doubled in size, growing from 75 members in March 2017 to more than 200 today, the first CorDapp on Corda, R3’s blockchain platform has gone live and a successful Series A fundraising round in May 2017 raised $107m from more than 40 investors.

The next year is already shaping up to be another busy one for R3 with the commercial deployment of Corda Enterprise and more CorDapps due to be launched later in 2018 so watch this space.

R3 marks significant milestone with SAP integration

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Commerzbank successfully completed an end-to-end integration of SAP S/4HANA business processes and R3’s Corda blockchain platform. This is a significant milestone as it demonstrates that blockchain technology can be easily integrated with software from SAP, the third largest independent software provider in the world.

By merging corporate SAP systems with distributed ledger technology, corporate clients can improve the efficiency of their trade and supply chain finance services. The deployment of Corda to the SAP Cloud Platform offers the opportunity to integrate technologies such as API Management, Machine Learning and Analytics.

Such an approach enables corporations to operate on a highly distributed but permission based and secure platform while fuelling the next wave of business innovations and utilizing the key benefits of blockchain-based technologies – trust, transparency and scalability.

Commerzbank is a member of R3’s global network and an active participant in a number of R3 initiatives on use cases in areas such as trade finance. SAP is actively collaborating with both R3 and R3 members.

“Trade finance is a key area of focus for R3 as we work with our partners to develop a vibrant ecosystem of applications on Corda. Integrating the platform with SAP’s business processes is a further milestone in enabling widespread adoption of Corda by businesses around the globe,” said David E. Rutter, Chief Executive Officer, R3.

R3 hosts CordaCon in London’s Square Mile

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R3 CordaCon is the fintech event creating the most FOMO this week. The event in London’s Square Mile is massively oversubscribed due to demand.

R3 has brought the largest single group of blockchain-inspired technologists and business leaders together in one forum.

They’re coming together in discussions, panels and demonstrations exploring their work on Corda and have focused on a range of topics from technology design to commercial applications and regulatory policy issues.

R3 is also hosting a members’ forum with developers and technologists from global and regional banks, insurers and other financial services institutions

With over 100 members and dozens of projects currently underway, R3 has gathered significant momentum over the past two years. Building the new infrastructure for the financial services industry is a major undertaking, but R3 is powering full steam ahead with the industry firmly behind it.

Chatsworth client R3 secures record-breaking USD 107 investment in distributed ledger technology

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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.

Regtech is booming, but is the UK missing out?

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Regtech (n). Short form for the regulatory technology being created to meet regulatory monitoring, reporting and compliance.

Regtech is booming, with USD 2.99 billion invested globally across over 400 private investment deals in the last five years.

Yet despite its predominant position in almost all other areas of financial technology, the UK is still lagging behind the US when it comes to regtech investment.

Just 9% of the almost three billion invested since 2012 went to UK based companies, according to the CB Insights figures. This put it a distant second behind the US, which scooped up 78% of the total investment.

Banks are looking to reduce costs to cope with a tougher investment market and find ways to handle the flood of new rules which the January MiFID II deadline will unleash. In this environment, it is little wonder investors see the potential for technologies which promise to make compliance easier, more efficient or more reliable for the financial sector.

UK regulators appear to have spotted the opportunity as well, and the Financial Conduct Authority (FCA) is looking to do what it can to help the UK’s regtech sector catch up with its transatlantic counterpart.

The regtech industry spans a wide variety of technologies and the industry which promises to make compliance easier, more efficient or more reliable. Some companies are using artificial intelligence to help banks comply with regulation, while the R3 group of over 40 banks is looking at how distributed ledger technology (DLT) can make reporting to regulators simpler.

Some regtech firms believe that Brexit could be a big boost to the UK’s regtech industry.  With the UK’s financial sector’s relationship with the EU now in flux, both in terms of regulatory equivalence and cross boarder trade, ““Brexit is a brilliant opportunity”, sais Diana Paredes, CEO of regtech start-up Suade.

The UK regulator, the Financial Conduct Authority (FCA) has also been working to encourage the UK regtech sector. The FCA’s executive director of strategy and competition, Chris Woolard, is keen to stress the role regtech companies can play. Talking to Financial News, he said, “It’s something quite positive where firms are taking quite seriously how they apply technology to their own compliance question.”

The FCA has also been leading the way when it comes to nurturing innovation. “There are other regulators around the world that have more funds and resources, and other regulators with more powers. But it was really only the UK financial regulator that has built into its governance a mandate to promote innovation and competition, as well as the traditional mandates of financial stability and consumer protection,” Imran Gulamhuseinwala, EY’s global leader for fintech, told the Financial Times.

Most notably, in 2015, the FCA launched its ‘sandbox’ to help companies developing new technologies. The sandbox allows banks firms which require regulatory approval before being able to operate their technology to test in a live environment. This allows firms which would otherwise need to develop their full technology and achieve FCA approval before fully testing their product, to develop their technology in a way which is responsive to both the FCA’s requirements and the demands of live operation.

So far, the sandbox service has proved popular with 69 companies applying for the first cohort in 2015 and a further 77 applying for the second cohort, according to a recent statement from the FCA. Following the success of the first cohort, the FCA has begun helping regulators across the globe to develop their own sandbox programmes, including in Japan, Canada and China.

It is heartening to see the UK regulator supporting this process and creating an environment where the next generation of firms who using technology to enhance the regulatory environment and reporting/confirmation/validation processes.

Financial markets have been buffeted by scandal and repetitional damage of late. It is time to programme some trust into the source code.

David Rutter: 2017 the year of blockchain delivery

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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.

R3’s Richard Gendal Brown named as top FinTech influencer

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Silicon Republic, Ireland’s leading technology news provider, has named Richard Gendal Brown as one of the top thinkers, advisers and policymakers in the global FinTech. 

This list identified fintech thought leaders whose ideas are making an impact internationally and setting the tone for the broader European sector.

“Head of technology at R3, Richard Gendal Brown is a key figure in a burgeoning ledger industry that is revolutionising present-day banking. His move from IBM to R3 last year was a pivotal moment for the consortium.” – Silicon Republic

R3 has made its Corda distributed ledger platform open source, granting the global developer community universal access to its source code to encourage collaboration, review and contribution to the platform.

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Click for article top fintech influencers

R3’s David Rutter discusses blockchain technology at TechCrunch Disrupt 2016

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David Rutter, founder and CEO of the R3 blockchain consortium took the stage in London earlier this week to discuss the progress of his company and underscore Wall Street’s enthusiasm over distributed ledger technologies.

Speaking at TechCrunch’s Disrupt London event, Rutter discussed R3’s distributed ledger platform Corda, spearheaded by the company’s CTO Richard Gendal Brown, the former executive architect for industry innovation and business development for IBM.

 Corda, which was open sourced last week, is a financial grade distributed ledger platform that records, executes and manages institutions’ financial agreements in perfect synchrony with their peers. It was designed from the ground up to address the specific needs of the financial services industry, and is the result of over a year of close collaboration between R3 and its consortium of over 70 of the world’s leading banks and financial institutions.

Rutter talked at length about how the platform had been heavily inspired by and captures the benefits of blockchain systems, but with design choices that make it able to meet the needs of regulated financial institutions. Crucially, Corda restricts access to data within an agreement to only those explicitly entitled to it, rather than the entire network. Rutter described it as the “plumbing and infrastructure for the future of finance.”

Asked what was wrong with the current “plumbing,” Rutter stressed that there’s simply too much room for improvement. Citing a McKinsey study, saying that its shows banks spend on the order of $3.6 trillion globally supporting their transactions, he likened current technologies to “spaghetti string.”

Rutter went on to say that R3 sees a “once in a generation” opportunity to help banks move to a secure financial infrastructure in the cloud – one that enables them to process and track nearly any kind of trade or money transfer nearly instantly, at less cost, rather than have to set aside money until each transaction is settled.

It’s a “panacea for regulators,” he added. “The way [things] work now, we record [transactions] on paper or enter them into a system” and there’s plenty of room for “shenanigans.” Meanwhile, he insisted, with distributed ledger technology, “the idea of hiding a ticket or manipulating a trade will be a thing of the past.”

Richard Gendal Brown on the open sourcing of Corda

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R3

R3, Richard Gendal Brown, Cheif Technology Officer

R3 has made its Corda distributed ledger platform open source, granting the global developer community universal access to its source code to encourage collaboration, review and contribution to the platform.

Richard Brown, R3 Chief Technology Officer, provides an overview of the platform and the journey the R3 consortium members have taken towards the open sourcing of the distributed ledger platform.  

 Corda is a financial grade distributed ledger that records, executes and manages institutions’ financial agreements in perfect synchrony with their peers. It was built in close collaboration with over 70 banks and financial institutions and is already by far the biggest collaborative effort of its kind in the distributed ledger space.

It is captures the benefits of blockchain systems, but with design choices that make it able to meet the needs of regulated financial institutions.

Crucially, Corda restricts access to data within an agreement to only those who need to validate it. Financial agreements on Corda take the form of smart contracts, linking business logic and data to associated legal prose in order to ensure that the financial agreements on the platform are rooted firmly in law.

David Rutter, CEO of R3 comments: “The successful application of distributed ledger technology to financial services relies on new solutions being able to integrate and work seamlessly with each other, otherwise the disjointed infrastructure financial markets are forced to operate with today will simply be replicated with different technology. The applications being built therefore need to be based on common, open, interoperable platforms – much like the common protocols on which the internet operates today. Open sourcing Corda is the next step in making Corda one of these platforms”.

 

Russian institutions flock to join R3 consortium

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Payment processor QIWI becomes the first Russian company to join the consortium’s global network.

R3, the global blockchain consortium behind the development and application of distributed ledger technology in financial markets, has expanded its membership with the addition of its first Russian member.

QiWi’s online payment system is one of the most widely used payment systems in Russia. It is used to make online purchases and pay for loans, mobile bills, and even home utilities, and offers terminals where users can make payments as they would on their mobile device.

QIWI is a payment services provider and the first Russian institution to collaborate with R3. It has long recognized the benefits of blockchain technology; earlier in July, the firm expressed interest in joining the blockchain consortium created by the Central Bank of Russia.

“Our goal with R3 is to explore this emerging technology space as we shape the future of payments and transactions throughout collaborative research with other members of the consortium,” says Sergey Solonin, QIWI’s chief executive officer. “We believe that blockchain projects that we are currently working on can be applied on one of the R3 platforms and have great potential to be favorably perceived by regulated financial institutions.”

The firm joins over 60 leading financial institutions, who collaborate in R3’s lab environment, R3’s Lab and Research Centre.

David Rutter, CEO of R3, said “The addition of QIWI is a further milestone for R3 … as we expand our network of consortium members and continue to develop truly global applications for this groundbreaking technology.”

R3 expands blockchain testing to bond markets, reference data and syndicated loans

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 It’s been a busy week for R3 CEV. The blockchain consortium has partnered with Credit Suisse, Intel and Axoni to advance the use of distributed ledger technology in real world use-cases.

As the financial services industry rushes to integrate the nascent technology, blockchain to a variety of markets and applications, we take a look at how a single shared ledger for financial transactions could enhance US Treasury trading, the reference data industry and syndicated loans space.

Bond Markets

The R3 consortium has successfully completed blockchain testing for bond trading in partnership with Intel. The test, which involved eight banks including HSBC and State Street, enabled trading, matching and settlement of US Treasury bonds, as well as automated coupon payments and redemption.

The initiative is intended to simplify and standardise protocols and processes in the US Treasuries trading, a market that has become increasingly complex of late, as noted in a recent Fintech Focus article. In the clearing arena for example, challenges persist. While the Fixed Income Clearing Corporation (FICC) acts as a central counterparty for its membership, non-bank firms often don’t qualify for membership and if they do, find FICC membership costs prohibitive, opting instead for bilateral settlement outside the CCP model.

Syndicated Loans

 Symbiont and data provider Ipreo have joined Credit Suisse in utilising R3’s Lab and Research Centre to test how distributed ledger could be used in the syndicated loans market. By connecting agent banks via a blockchain, the initiative is expected to achieve faster and more secure settlement in the loans market.

The user benefits are clear and demonstrate the value distributed ledger technology can deliver in a wide variety of fields. Loan investors will have direct access to an authoritative system of records for syndicated loan data, a process that will reduce manual reviews, data re-entry and systems reconciliation.

 At present, the syndicated loans market requires each participants involved in a transaction to maintain its own separate lending system. By adopting blockchain technology, loan processing can be done exclusively on a shared distributed ledger – minimising middle and back office operations.

 Reference Data Market

R3 CEV has also announced a collaboration with capital markets technology provider Axoni, to test how blockchain technology can be used to enhance the reference data market. The project, which also involves Alliance Bernstein, Citi, Credit Suisse and HSBC is the latest example of how the financial services industry is finding new applications for the technology.

Reference data has become a real issue in financial markets of late as it accounts for up to 70% of the data used in transactions, but continues to be supported by legacy technology that often requires manual processing and constant upkeep. With reference data adding significantly to operational costs and ultimately affecting the bottom line for cost conscious institutions; it is a market ripe for innovation.

Moreover, as the market continues to grapple with regulatory measures designed to ensure firms manage and maintain the quality and accuracy of their reference data, many are now exploring the possibility of streamlining the process via a distributed ledger.

While those institutions developing blockchain solutions may have passed the proof of concept test, the need to tailor this technology to a variety of different use cases now presents the next challenge.

Blockchain set to streamline reference data market

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Blockchain consortium R3 CEV have announced a collaboration with capital markets technology provider Axoni, to test how blockchain technology can be used to enhance the reference data market. The project, which also involves Alliance Bernstein, Citi, Credit Suisse and HSBC is the latest example of how the financial services industry is finding new applications for the technology.

Reference data has become a real issue in financial markets of late as it accounts for up to 70% of the data used in transactions, but continues to be supported by legacy technology that often requires manual processing and constant upkeep. With reference data adding significantly to operational costs and ultimately affecting the bottom line for cost conscious institutions; it is a market ripe for innovation. 

Moreover, as the market continues to grapple with regulatory measures designed to ensure firms manage and maintain the quality and accuracy of their reference data, many are now exploring the possibility of streamlining the process via a distributed ledger. 

In partnership with Axoni, R3 CEV recently completed a multi-month proof of concept (PoC) exercise, coordinated by Credit Suisse. The prototype was created using Axoni Core to simulate the management of reference data on the blockchain, and also inform corporate bond issuance. The technology enabled participants to interact with reference data after issuance, with any proposed changes requiring validation by the underwriter to ensure the ledger provided a single, unchangeable record of all data related to the bond.

David Rutter, CEO of R3, comments: “Quality of data has become a crucial issue for financial institutions in today’s markets. Unfortunately, their middle and back offices rely on legacy systems and processes – often manual – to manage and repair unclear, inaccurate reference data. Distributed ledger technology – which allows financial institutions to push these functions to a cloud environment – removes the need to reconcile multiple copies of data, providing a sophisticated and agile solution to the headaches currently caused by these legacy systems and processes.”

Whilst the study of distributed ledger technology’s application to reference data is still in its early stages, this project marks the first step in testing its potential.  

R3 patent application unveils its vision for future of blockchain technology

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R3 executives speak publically for the first time about Project Concord and their vision for the future of blockchain technology.

Distributed ledger and blockchain technology represents a once-in-a-generation opportunity to transform the economics of data management across the financial industry.

However, R3 believes the blockchain and distributed ledger platforms that led to this breakthrough moment were never designed to solve the problems of financial institutions and do not meet all their needs. These include tight linkage to the legal domain, an obligation to prevent client data being shared inappropriately and interoperability with existing financial infrastructure.

As reported in the Wall Street Journal, the R3 blockchain consortium filed a patent for its Corda shared ledger platform.

Corda is the outcome of the analysis R3 undertook on how to achieve as many of the benefits of distributed ledger and blockchain technology as possible but in a way that is sympathetic to, and addresses, the needs of regulated financial institutions.

The platform enables firms to record and process financial agreements using smart contracts, as explained in depth in R3 CTO Richard Gendal Brown’s latest whitepaper.

Corda is part of Project Concord, R3’s overall vision and roadmap for transforming financial services infrastructure. Concord will address challenges such as governance, internal record keeping and regulatory reporting across the financial services marketplace.

With a number of successful prototypes having already been completed on the Corda platform and an alpha launch of Concord scheduled for 2017, the next year looks set to be a turning point in the history of financial technology.

R3 blockchain consortium leaders rise up technology rankings

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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.

R3 Investigates Smart Contract Templates For Blockchain Inspired Platforms

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R3 is spearheading efforts to understand and address the challenges of developing master templates for smart contracts, the self-executing contractual agreements used to trade, record and manage assets on distributed and shared ledger platforms. The firm is also exploring how these features could be implemented within existing legal and regulatory frameworks.

Following the R3 Smart Contract Templates Summit in London and New York in late June, R3 has agreed to collaborate with a diverse working group of its consortium members, standards bodies, law firms, academic institutions, exchanges and market infrastructure providers, including Barclays, the International Swaps and Derivatives Association (ISDA), Norton Rose Fulbright and University College London (UCL). The group will begin exploring the development of repositories of smart contract templates for banks to download and use on blockchain-inspired platforms, such as R3’s Corda.

At the summit the group discussed potential roadmaps for development, with a short-term focus on understanding the challenges of connecting existing real-world legal contracts for products such as interest rate swaps, to smart contracts – enabling the simplification of legal documentation and mutualisation of costs for banks.

The R3 Smart Contract Templates Summit’s presentation is now publicly available here:

Currently each bank stores its own instance of contracts, which can introduce inconsistencies and reconciliation challenges. Smart contracts operating on distributed and shared ledgers enable each of the parties to see the same agreed set of legal documents.

The group’s longer term goals include working with the legal community and academics to investigate how to take smart contracts to a point where they can be admissible in court and used for entry into dispute resolution. An update will be given at the second R3 Smart Contract Templates Summit later this year.

R3 Develop Solution To Prevent Blockchain Front Running

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According to R3, the blockchain model as it stands will not be suitable for financial services, as it would allow everyone to see exactly what was being traded, when it was being traded and who by – potentially allowing competitors the opportunity to front-run each other.

CEO, David Rutter and Managing Director, Charley Cooper, explain how R3 is trying to strike the balance between the original purpose of the blockchain – to have a public record of transactions that must be verified by the majority of involved parties – and maintaining an appropriate level of transparency and anonymity as required by banks, financial institutions and regulatory authorities.

To read the full article in Fortune, please click here.

R3 at Consensus 2016: focus on payments and smart contracts

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When International Business Times interviewed Chatsworth client R3 at last week’s Consensus 2016 conference in New York, CEO David Rutter took the opportunity to highlight payments and smart contracts as two key areas of development for the consortium and outlined his intention to partner with other fintech firms to deliver solutions in these areas, in addition to building apps unilaterally.

R3 is currently working with its members to examine a number of use cases in its Lab and Research Centre, which has quickly become the centre of gravity for use-case testing and evaluation of blockchain-inspired technologies, bringing together banks, non-banks, both established and start-up financial technology companies, trade associations and regulators. Based on the findings from these lab-based experiments, R3 will develop commercial applications for the financial services industry that leverage the appropriate elements of distributed and shared ledger technology.

To find out more about R3’s plans, head over to International Business Times.