Friday, December 2, 2016

DLT: Noun, Adoption, R3, Sandbox, VMCH...Rupeee

Each time I set out to do a blog much more comes along. Anyway, time to turn thoughts back to adoption and governance.

1. DLT is a noun.
I enjoyed attending and moderating the DLT section of the Annual Clearing and Settlement conference. One takeaway I tried to give at the conference is that DLedgerT is a noun. A ledger is a ledger. It is a thing, a noun, it doesn't do anything. There are people claiming DLT will do all sorts of wonderful things. It won't. What it will do is allow things that are already being done to be performed much more efficiently.

2. Adoption of DLT.
I had the pleasure of 3 "fireside chats" with DAH, Paxos and Clearmatics. Each of them very real use cases. My observation on all of this is that DLTechnology is becoming commoditised. I don't mean the fabrics / chains, they are still very much evolving. I'm keen to see the new release of Hyperledger (and how Corda will dovetail into this) and see how Ethereum gets on. Regardless, of the technology, as we move from Proof of Concept to adoption we need legal certainty, dispute resolution and governance. So whilst we're becoming familiar with the technology just being 'an enabler' what is the critical overlay for adoption is governance. It comes as no surprise to me that we're seeing a flurry of legal position papers, each of they will be trying to position themselves as the legal certainty partner for adoption.

The models I see emerging are Vendor based (e.g. DAH working as a vendor to ASX where ASX leverage their existing legal framework for the process of adoption. Consortia based. Slightly longer lead time as the governance arrangements take time to put into place and then finally Strategic Partner.

Some of those papers:
Norton Rose: Can smart contracts be legally binding contracts?
Mayer Brown (Law firm) will present "Regulatory Approaches and Issues in Practice of Blockchain DLT in Financial Markets”.
EY: Blockchain: five profound legal impacts
Accenture files patent for editable blockchain...(Ummm, I don't think this is the right way to view privacy. I don't think they'll get a lot of value from this patent!)

3. R3 in the news (and on the street!)
Spoiler alert, dreadful pun intended. Every coin has two sides....I'm amazed that the funding status found it's way onto the web. When I started my DLT journey I had no idea of which sources of news to 'trust'. (I was anchored to traditional media - since then I've become(?) a twit / twitter'er). For as much as there is news of firms embarking on a different DLT fork, what is clear, is that everyonne is still in the game - some are just realigning their chips.

4. FCA Sandbox.
24 firms have been announced into the sandbox. Now, you may have different categorization to me but I thought it interesting to see where the use cases 'clustered'. Payment type cases are 25% (6), 'retail' interface applications 25% (6), another 25% (6) are not ready yet (so they're phase 2), and the balance is made up of 3 in Capital Raising, and One (yep 1) each in insurance, loans and Id.
5. ...and another thing...VMHC.
Sorry, I just wanted to have a rant about this. Variation Margin Hair Cutting has once again come to the fore. It enrages me! (Sorry, I know, who gets agitated about VMHC?). Anyway, this is the idea that once a CCP runs out of money / skin in the game they then start to pilfer funds from anyone that has a positive variation margin. i.e a profitable position. This is just stupid. What about the contagion risk of international markets and hedged portfolio books? Robbing Peter to pay Paul in one jurisdiction / asset class just compounds the problem. Yes, it's a G20 inspired regulatory remedy, intended to prevent the tax payer from bailing out the market. OK. I get user pays and I'm on board with that concept too. But really, VM? Surely IM would be a better instrument for this. VM is a blunt instrument not best suited for the job. Poor choice. Yes, I further appreciate this is a super Black Swam event where we're talking about the simultaneous default of at least 2 of the top clearing firms but that is still no justification for enshrining the wrong principle. Grrrr.

6. ...and finally, oh what to do with those rupees? Risk, in whatever form is like a stress ball. You strap down one avenue...and just as quickly another seam opens. The unintended consequence of a super well intentioned motive to squeeze the Indian Black economy...Bitcoin. And then we have the IRS demanding wallet details. I expect India will join the chorus.

Festive and season greetings to all. Time to get those Xmas decorations up!

PS. The piccie was going to be Trump and the remodeled HairForce One but the project managers dilemma made me smile.


Blockchain company R3 CEV has reduced the amount it aims to raise from bank members in its first large round of equity funding to $150 million from $200 million and is changing the structure of the deal, according to a person familiar with the plans.
R3, a New York-based startup that runs a consortium of more than 70 financial institutions, now plans to give bank members a 60 percent equity stake in exchange for the funding, the source said.
Initially, it aimed to create a new company providing shared services for the owners, who would get a 90 percent stake. R3 would have run this utility for 10 years and retained a stake in it.
Goldman Sachs Group Inc (GS.N) and Banco Santander SA (SAN.MC), both original participants, are not renewing their memberships and not investing in the deal, spokespeople said.
Updated w/ MS and NAB out.
Updated with amazing leak:
Opted-out: Banco Santander, Goldman Sachs, J.P. Morgan, Macquarie Group, Morgan Stanley, National Australia Bank, and U.S. Bancorp.

Only weeks after the execution of a hard fork to mitigate various DoS (denial-of-service) attacks, the Ethereum network and its developers are struggling to deal with yet another major flaw. This time, major issues in regards to smart contracts have emerged, which have rendered the efforts of decentralized applications in the Ethereum network purposeless

IRS Demands Records of 4.8 Million Bitcoin Users
The IRS (Internal Revenue Service), filed a petition in federal court seeking disclosure of all Coinbase US customer records over a three year period, 2013-2015.
“The government has not alleged any wrongdoing on the part of Coinbase and its petition is predicated on sweeping statements that taxpayers may use virtual currency to evade taxes.”

UK's Royal Mint, CME Group launch blockchain-based gold trading platform

R3's Corda's code will be contributed on Nov. 30 to the Hyperledger project - a cross-industry project led by the non-profit Linux Foundation to advance blockchain technology by coming up with common standards.

R3 Projects: Barclays Smart Contract Template (ISDA agreement).
This is a nice youtube clip demonstrating the Barclays ISDA agreement use case.

R3 has collaborated with the Monetary Authority of Singapore (MAS) to launch its first dedicated distributed ledger technology (DLT) Center of Excellence in Asia. The lab will be established at Lattice80 in the Central Business District (CBD) of Singapore.

Singapore’s Central Bank Wants Blockchain for 24/7 Inter-Bank Payments

Connecting digital islands in trade finance
Michael Vrontamitis, Global Head of Trade, Product Management, Standard Chartered, talks about the industry’s slow progress in digitalising trade finance.
** This piece was recorded at SIBOS '16. I think Michael does a good job and succinct job. Basically, Trade is a good use case as it has external drivers (i) price reduction in underlying commodities and (ii) reduced commodities demand and lower growth rates. However, a) you need to digitise trade, before you can digitise trade finance, and b) complexity of counterparties in the ecosystem with disparate approaches results in digital islands. He mentions some technologies: OCR, Cloud, AI, Algo's, Big Data...all of which I think are irrelevant until you get a DLT solution in place. Once you have the data addressed, then you can start to be creative.

Financial inclusion and the 'un-banked'

Singapore FinTech Startup KYCK! to use IBM Blockchain and Bluemix to aid customer onboarding process in financial institutions.

In traditional applied cryptography, security assumptions tend to look something like this:
No one can do more than 279 computational steps
Factoring is hard (ie. superpolynomial)
Taking nth roots modulo composites is hard
The elliptic curve discrete logarithm problem cannot be solved faster than in 2n/2 time
*** I love this. So much content out there and I am still naive in my crypto security and authentication journey. Even the sources alone are interesting. So, much in the GitHub and Reddit domains.

Your money's no good: rupee note cancellation plunges India into panic.
India’s rupee restrictions are boosting demand for bitcoin.

Market Structure

ESMA prepares for MIFID II Systematic Internaliser regime
The earliest mandatory deadline on which firms must comply with the SI regime, when necessary, is 1 September 2018

FSB: Essential Aspects of CCP Resolution Planning

Adding it all up: the macroeconomic impact of Basel III and outstanding reform issues
...the results suggest that Basel III can be expected to generate sizeable macroeconomic net benefits even after the implied changes to bank business models have been taken into account

Central clearing predominates in OTC interest rate derivatives markets
Central clearing predominates in the over-the-counter (OTC) interest rate derivatives markets but is less prevalent for other OTC derivatives, as the combined results of the BIS semiannual and Triennial surveys of outstanding OTC derivatives positions show.

Exchanges struggle to attract derivatives trading from OTC markets
xchanges have not won a bigger share of derivatives trading, according to the latest BIS Central Bank Triennial Survey of foreign exchange and over-the-counter (OTC) derivatives market activity. Since 2009, the trading of derivatives on exchanges has shown no trend, whereas their OTC trading has trended upward

ESMA has finalised its technical advice to the European Commission on aspects of future rules for benchmarks.
In particular: how benchmarks’ reference values can be calculated by using data reporting structures under existing EU rules such as MiFID II and EMIR; some of the criteria for deciding when third country benchmarks can be endorsed for use in the European Union (EU); and what constitutes making a benchmark figure available to the public.

CFR Policy Statements for Conduct in Operating Cash Equity Clearing and Settlement Services in Australia
The Council of Financial Regulators is today releasing two policy statements setting out Regulatory Expectations for Conduct in Operating Cash Equity Clearing and Settlement Services in Australia and Minimum Conditions for Safe and Effective Competition in Cash Equity Clearing in Australia.

ASX Welcomes Guidelines for Equities Clearing Competition
The ASX, which has been under pressure from trading firms to lower costs, has said it will decide by the end of 2017 whether a new blockchain-style system will replace its current method for clearing and settling stocks.

Post-Trade: From the EEC to Here


The creation of Credit Suisse (Schweiz) AG.
The new legal entity going live has involved the transfer of around 1.4 million clients into the new bank. Credit Suisse will reveal at a later stage the amount of assets transferred.
Local rival UBS established a new Swiss subsidiary in 2015.
Credit Suisse said on Tuesday it will dismantle its asset management unit into its private bank

KCG completes acquisition of Neonet

Kees van Dijkhuizen succeeds Gerrit Zalm as CEO of ABN AMRO

Cinnober Extends Clearing Capabilities, Launching New Subsidiary


Hacker holds San Francisco railway to ransom, demands 100 bitcoins

For those that doubt Global Warming, or it's more politically correct term: Climate Change.

US Jason Chaffetz Serves FBI Asst Director With Subpoena During Hearings

Dad turns 6-year-old son's drawings into reality... with slightly disturbing results


"Edison’s electric light did not come about from the continuous improvement of the candle"
Oren Harari

"If I had asked people what they wanted, they’d have told me ‘a faster horse’!"
Henry Ford.

I was actually searching for the Harari quote, which I found coincidentally I found in this 2009 blog post - which is still as true today. Impressive blog post to stand the test of time!

Sunday, September 18, 2016

Happy T2S (Wave3)!

As ever lots going on.

I was delighted to complete the Solent Swim for MND. The piccie is me with warrior Dave Setters who is advancing the MND awareness campaign in the City. For those of you that could still donate to this cause, that would be great. You can read more about the story here:

Very much looking forward to Anbima Cetip Fixed Income Conference this week.
20 Sep 2016. San Paulo, Brazil

So, whats being going on....


Blockchain Will Become ‘Beating Heart’ of the Global Financial System
Blockchain, the technology behind bitcoin could profoundly alter the way banks do business worldwide, lowering their operating costs and making financial services securer and more accessible, a World Economic Forum Report finds.
*** Another nice 130 page document. I confess, I've not read it all, I just cherry picked the potential use cases (deep dives) that were of interest to me. I think the editorial team have done a great job. the report is consistent through-out and the icons and logos are great too!

ASX Update.
Interesting insights from their annual report (slide 10/38).
Key updates
• Clearing fees reduced 10% from 1 July 2016
• Clarity on equities clearing market structure
Investment in distributed ledger technology
• Initial phase complete
‒ Developed working solution for subset of use cases
‒ Engaged with regulators and stakeholders on concept
‒ Met performance, security and scalability thresholds
• Increased investment in Digital Asset Holdings on 30 June 2016 to 8.5%, total investment US$17.4 million
• Next development phase
‒ Build an industrial strength platform that could replace CHESS
‒ Engage with customers and other stakeholders
‒ ASX to decide on CHESS replacement in FY18
‒ CHESS will continue to operate as normal
*** Some takeaways...clarity on equity market structure, subset of use cases, engaged on concept, could replace Chess, industry engagement, Chess...BAU.

ItBit Rebrands as Paxos Amid Blockchain Pivot
*** All part of recent restructuring / realignment between DLT and BTC

Global Banks Announce Partnerships and Investments at Ripple
Ripple CEO Chris Larsen stated that Standard Chartered’s backing came as part of a strategic investment round of $55 million, from a wide swath of the financial industry. Alongside this new round, the company announced eight new bank customers, including Standard Chartered, BMO Financial Group and Shanghai Huarui Bank.
Ripple has received a total of over $93 million in funding.

#Devcon2 in Shanghai is around the corner after it's highly successful Devcon London last December. This years event stands to be even bigger. Held in conjunction with the Global Blockchain Summit where Microsoft is a key sponsor. Vitalik is expected to comment on Ethereum2 and it's new roadmap to address concerns about consensus networks.
Registration for Shanghai is full. (Amazing in itself).
All part of International Blockchain Week in Shanghai

Blockchain Requires Radical Change, Not Compromise
Frances Coppola (@Frances_Coppola)
*** I liked this author's style. I also like her twitter account which I'm now following. It prompted me to comment (which I rarely do - I used an old passport photo as an avatar to hopefully capture that 'hipster' look)....
Very nicely presented piece...but just doesn't resonate 100% with me.
"To use radical new technology effectively, you have to be radical"....hmmm, some best radicals find new simplicity and patterns. (e.g. it was radical to think of the earth not at the center of the universe....but look how much simpler orbits were to explain as a result of that radical thinking).
"So they compromised. They went for a permissioned DLT." Nothing wrong with permissioned. Markets are already permissioned via membership requirements. And dark pools are not all bad either (appreciate the "Flash Boys" arguement).
You cannot radically change settlement and clearing processes while leaving trading practices untouched.
I think you can, and we do decouple the transaction value chain (Think trading / exchanges, Clearing / CCPs and Settlement / CSDs). These components of the transaction value chain are often represented by different legal entities which interface. The debate is vertical / horizontal.
Part of the difficulty in going through all this subject matter is the ambiguity of some of the processes (i.e. domestic market practices). This piece covers so much ground, admirably, but each issue needs a further level of granularity to really tease out the issues.
Regardless, I enjoyed reading the post, it is in a nice style and more insightful than most (if I may say).

Blockchain's Numbers Don't Add Up
So a real-world example, then, that it takes 20 years for a new, efficient 2 billion-euro post-trade system with full central-bank backing to start recouping its cost. It would be a miracle if blockchain could repeat this feat in a fraction of the time without similar backing or funding.
*** I think this is the wrong analogy. FinTech 'mice' can work in harmony with the 'elephants' of FMI, you just need to know the melody (and that;s not 2 billion)

Traditional investment banking model 'no longer an option,' states McKinsey & Company ‘blockchain technology could deliver a broad range of benefits’


ISITC DLT Standards working group.

Hyperledger to Address International Trade Standards Body

Australia to lead ISO Blockchain standards endeavor

Just on Standards, they're Standards...and by their very nature open.

DLT Land Registry

Land Registry is one DLT use case I've had the pleasure to look into with BAT.
Interesting stance on UK privatisation.
Now put on hold:
Lammy added: “It pays rich dividends to the public purse and there’s absolutely no reason why it should pay dividends only to wealthy investors and shareholders in the future.”

Incorporating blockchain technology in land registries is not new. The Republic of Georgia and Honduras have been conducting such experiments in recent years, while Sweden is the first advanced western country to take steps in this direction
(BTW, the jurisdiction BAT looked at is not listed above).

Sweden Conducts Trials of a Blockchain Smart Contracts Technology for Land Registry
...Rather it is about reforming the workflow of selling a property that integrates with existing systems for keeping track of who owns what.
*** Love it! This comment hits the nail on the head.


Florida Senator Drafting Bill That Could Recognize Bitcoin as Money

How Bitcoin Succeeded Where Ethereum Failed
Ethereum recently hard forked their blockchain to reimburse users who were affected by a poorly structured smart contract, known as The DAO. The hard fork was cheered as a great success shortly after it was initiated, and some supporters of a Bitcoin hard fork for the purpose of increasing the block size limit even took the opportunity to claim that hard forks aren’t as scary as some make them out to be.
“Ethereum isn’t fixing something technical – they’re doing a bailout of a company [or] group that screwed up,” Bitcoin Core contributor Peter Todd told CoinJournal. “Nothing in this bailout hard fork actually fixes anything technical.”

A Primer on Bitcoin Governance, or Why Developers Aren’t in Charge of the Protocol
*** Great piece and highlights governance of code and implementation(s).

Why the coffee shop doesn't want your Bitcoin!
....Starbucks doesn’t want your stupid bitcoin. Fraudulent coffee transactions are not a pain point. The card is physically present, so the barista knows you didn’t just go on Alphabay and buy a list of stolen numbers. Plus she’s watching you consume the coffee right there. If you have a problem with said coffee, you ask for a new one. There’s not gonna be a chargeback.
*** An unconventional read - but I enjoyed the reality check.

How Bucket Shops Democratized Access to the Financial Markets

And a further insight into Credit Card charging process (for that coffee).

Capital Markets

Happy T2S
With wave 3 on board, T2S is now processing about 45% of the total transaction volume expected after the end of full migration in 2017. The next migration wave (wave 4) is planned for 6 February 2017.

Goldman Sachs Has Started Giving Away Its Most Valuable Software
The bank’s new gambit: deploy its technology to win more business from clients

Former BoE official expects euro clearing to leave London post-Brexit
Britain's dominance in euro-denominated clearing of financial contracts will end after the country's withdrawal from the European Union, former Bank of England Governor Charlie Bean said on Wednesday.
French President Francois Hollande has said this should move to the euro zone in future after Brexit, but banks have privately expressed scepticism that this can be done.
"I think it's certain that we will lose it," Bean told a House of Lords committee.
He said he had "absolutely no doubt at all" that euro denominated clearing will be mandated to be taken back to the euro zone.

In Global Banking, Apps and Security Don't Mix
Back in February, Bangladesh's central bank revealed that it had fallen victim to an $81 million theft. (Actually, the Philippine Daily Inquirer broke the news – the Bangladesh bank would have preferred to keep the information under wraps pending investigation.)
Since then, dozens of banks around the world revealed a series of thefts involving Swift, the global financial messaging system. Just last week, Swift disclosed new cyberattacks involving its system. In each case, bank computers were compromised to enable unauthorized transfer requests.

Deutsche Bank calls for reform of global financial messaging system SWIFT
SWIFT is only as strong as its weakest member, Deutsche Bank's Chief Information Security Officer Hinrich Voelcker said on Wednesday, adding the bank was in discussions with SWIFT about the consequences of the Bangladesh heist.

Basel III monitoring
The Committee is making available publicly the Basel III monitoring workbook, accompanying instructions and a list of frequently asked questions.

What Else Can Central Banks Do?
The latest Geneva Report on the World Economy argues that central banks can do more to stimulate economies and restore full employment when nominal interest rates are near zero. Quantitative easing and negative interest rates have had beneficial effects so far and can be used more aggressively, and the lower bound constraint can be mitigated by modestly raising inflation targets.
*** Note, requires one time registration, but it's worth it. Not a spam site!

State of the Union 2016: Completing the Capital Markets Union – Commission accelerates reform
On the occasion of President Juncker’s 2016 State of the Union address, the European Commission has today set out the next steps to accelerate the completion of the Capital Markets Union (CMU), a flagship project of the Juncker Commission to boost jobs and growth in Europe.

ESAs reject proposed amendments from the European Commission to technical standards on non-centrally cleared OTC derivatives
The three European Supervisory Authorities (EBA, EIOPA, ESMA - ESAs), published today their Opinion addressed to the European Commission expressing disagreement with its proposed amendments to the final draft Regulatory Technical Standards (RTS) on risk mitigation techniques for OTC derivatives not cleared by a central counterparty

PM should seek parliamentary approval over article 50, says Lords committee
“It would be constitutionally inappropriate, not to mention setting a disturbing precedent, for the executive to act on an advisory referendum without explicit parliamentary approval – particularly one with such significant long-term consequences. The government should not trigger article 50 without consulting parliament.”
*** Hmmm, should a democratic government (where the majority of MPs will vote for gravy train, opps, sorry remain), be able to over-rule an 'advisory' (ballot paper never suggested to me they were asking for my advice!) referendum. I guess only honourable Lords know the difference between responsible 'speculation' and citizens reckless 'gambling'.

The next big thing in CSR.
The Modern Slavery Act: How should businesses respond?

Nestlé in society: Creating Shared Value and meeting our commitments


Fiji's appreciation for Ben Ryan's role in guiding their men's sevens side to Olympic gold has seen him awarded a three-acre plot of land which features a mountain and waterfalls.

How I Used & Abused My Tesla — What a Tesla looks like after 100,000 Miles, a 48 State Road trip, 500 Uber Rides, 20 Rentals & 2 AirBnB sleepovers.

Monday, August 22, 2016

DLT: ESMA paper and Standards, Solent Swim, Olympics and Hype.

Happy Olympics!

And what an amazing Olympics it has been for Team GB. Hard to pick my favorite moment and event, but the Brownlee brothers has to be up there.
‘Success by design, not by chance’

One of papers I've been taking a closer look at is the ESMA consultation document on DLT. It is an interesting paper, from a securities market practitioner point of view. I found it a paper of 2 halves. An interesting bit that outlined some benefits and considerations and then a less useful part when they speculate on use case scenarios in both Clearing and then Settlement. Typical of a regulatory paper, the first question is: do you agree with all of the above?....and then: now, what did we not identify in the above question?
The paper includes DLT: Benefits, Challenges, Risks, Safekeeping and Reporting. Then a specific focus on the Regulatory Framework for each of Clearing and Settlement. I'm contributing to a couple of responses to the paper, so if you have a strong view you want to get across I'm sure I can find a medium to assist.

I've also been looking into Standards for DLT. (this weeks piccie!). We all know the importance of standards. My feel, is at this juncture, it's nice to have as much information as possible to make an informed choice about the chain you want to use for the application you're going to develop. The next step, is to start to put a measurement framework around this. (Hence the engagement with Academia and other standards bodies).
If you are interested in DLT standards please do reach out to me.

This week I'll also be undertaking my own challenge on behalf of MND.
I'll be swimming across the Solent, from the Isle of Wight to Portsmouth on Thursday.

....Unlike a triathlon or lake swim swimming across the Solent is a major safety concern as we will be crossing a major shipping lane, used by large freight vessels and oil tankers in and out of Southampton and also the route of the Portsmouth to Fishbourne Isle of Wight car ferry. Because of this we have to be very clear on our safety procedures. Shipping has right of way and we ALWAYS give way to shipping.....Please be aware that a large vessel will have a blind spot of up to 500 metres under its bow from the bridge....

I'll be doing the swim in the name of Dave Setters:

These days many people pick a charity and stick with it...and I very much respect that. If there are any readers out there who resonate with the MND cause then I'd (they'd) be grateful for any support at:
For my part, I'm both grateful and respectful to Dave and the organisers for the opportunity to do this swim.

Have a great week all...and for those of you that support MND, many thanks in advance,


DLT / Blockchain

The Aussies have published a short information paper on their view on DLT standards. I think it's pretty poor as even at the highest level it still confuses sectors and use cases. (hence what hope for the underlying standards?)
Blockchain & Electronic Distributed Ledger Technologies

ItBit Hit With String of Departures in Bitcoin-to-Blockchain Transition
*** This re-org actually makes a lot of sense to me. I think we'll see a lot more demarcation in services and activities across all Bitcoin and then DLT firms.

The future of financial infrastructure: An ambitious look at how blockchain can reshape financial services
*** This is a 130 page paper that I confess, I've just browsed at.

Decentralized Autonomous Organization
..."On the Blockchain, no one knows you're a fridge" - Richard Brown

Despite Positive Outlook, New Research from State Street Reveals Asset Owners, Managers Lack Readiness for Blockchain

I read this game review with interest....and given the hype around blockchain, I enjoyed this reference to hype:
....hype can be a cruel mistress: she's elusive when you need her most, and demands a heavy payment after she's gone.... (This comment actually from a game review, but it resonated with me when applied to DLT).

Market Structure

Bats challenges FTSE with real-time UK benchmark indices
....Napoleon Bonaparte once observed that battles are won and lost in a quarter of an hour...

New management at MSEI (Metropolitan Stock Exchange of India Limited)


Glencore: Massive investment in coal mines needed.
Some interesting high level numbers here - highlighting the reality gap between Environmental asperations and real world practicalities.
Glencore have also published a great report on Climate Change and their business:
I love these reality checks against on environmental rhetoric.

“In a tumultuous world, marked by slow growth, excessive inequality, massive refugee flows, and sectarian violence, it’s tempting to believe we can reduce our exposure and increase our personal and economic security by turning inward and keeping the world’s problems out. We’d all like to have the benefits of global interdependence without the burdens. However, because there are disruptive forces we cannot escape, co-operation and collective action are much more likely than withdrawal and isolation to produce prosperity and security. For a nation as large, diverse, and successful as the UK, there is no escape from the growing pains and contradictions of the 21st century world.”
*** I did like Bill's (speech writer's) comment.
*** That said, I think the 'fear' of Brexit is overstated. I'm delighted to see Boris as Foreign Secretary. Right from the outset I think Boris had the right idea - not to abandon the EU...just to re-negotiate. 
LinkedIn to Microsoft: connecting global and corporate professional networks
*** Some hype from LinkedIn. Selfishly, I look forward to an easier interface with Skype. 
For product development...I look forward to an easier business card management tool.
*** Handy travel gadget!

Manhattanhenge: Thousands gather to see setting sun aligning with New York City's east-west streets
Manhattanhenge occurs twice a year either side of summer solstice around 28 May and 12 July. could be argued that despite the talk of despondency, Australia’s has actually done quite well in Rio for a nation of its population and wealth. Yes, no doubt, a number of performers and teams failed to live up to their potential, but look at the countries above Australia on the table, all countries with bigger populations and bigger GDPs....
Perhaps Australia needs to consider that its period of well-planned, well-funded sporting over-achievement is over. The rest of the world has caught on and caught up, and unless the nation is willing to engage in a funding arms race merely for the cachet of sitting in about fifth place on an Olympic medal table, Australians best get used to it. Better still, it wouldn’t hurt to focus on what their athletes have achieved, and not what they haven’t.

Friday, June 10, 2016

Brentry and unpacking, the BTC by half, ESMA paper, chains...I'm for Theil and bravo Hillary!

Some more thoughts on unpacking....Brexit to Risk.

With the BTC halving date fast approaching felt I better get something out on this.

My focus on the coming days is with the chains if you're a chain or you have excellent contacts with a chain please let me know. Will make these investigations public in the coming weeks and via the ISITC Europe working group.

Blockchain / DLT

ESMA releases Consultation on DLT applied to Securities Markets.

The National Settlement Depository (NSD), Russia’s central securities depository, has developed and successfully tested an e-proxy voting system running on a distributed ledger built with Nxt blockchain.....why they chose NXT instead of Bitcoin or Ethereum

Bitcoin halving date.
...from 25 BTC to 12.5 BTC. (circa 10th July)
Countdown here:
(approx 75% of bitcoins have already been mined.)
Bitcoin price continues to rally:

All, interesting. At the halving date, around 10th July, in theory (ignoring transaction fees) a miner will receive 50% less for his efforts...therefore you would expect some 'rational' miners (who know their break even and cost of business) stop mining until either price recovers or costs fall (e.g. energy). Hence I would expect the hashing / difficulty to fall....yet this does not appear to be the case.

So, rewards are halving, price is rising and so is the hash rate. That all sounds super bullish to me. 
R3 Adds Life Insurance Firm AIA to Blockchain Consortium

Goldman Sachs: Blockchain Tech Could Save Capital Markets $6 Billion a Year
(contains link to 88 page report).


Instinet Europe Taps Richard Parsons as CEO, Succeeding Adam Toms

Why ABN Amro Wants to Separate Bitcoin from the Blockchain

Brexit to Brentry

To date, I must say, I've found the Cameron 'fear' campaign, be it shouting, scaring or withholding government departments from furnishing the material for an informed debate more of a reason to vote to leave rather than to stay. I like Boris, but it is more the actions of Cameron that has forced me to re-think my initial default position to remain.
So, what is a good European to do? And what makes up a good European? Is what is good for Europe good for Britain? Or should Britain's interests be considered paramount to those of the EU? I think Britain in the EU certainly makes the EU better....but does it make Britain better? What is the lesser evil?

Lets unpack some issues:
I believe good ethics and good business can go together. Both sides of the same coin. Environmental sustainability does not need to mean a drop in profitability. Is the UK more green, with more blue flag beaches etc with the threat of Europe hanging over it? Yes, I believe so. 
I assume the WWF is independent, and they've published what I think is a very poor and unconvincing paper at getting their points across.
Regardless, I think Britain is 'Greener' if it remains within the EU.

Maybe, as 'good Europeans' the UK should leave, let Europe crack on and sort out all the capital reallocation and re-distribution problems they have: Greece, Portugal...then Spain and Italy and France...and then we can come back in and join the fold. Too many cooks can spoil the let 'em crack on and we'll re-join them after dinner.

When I was at the Swift conference two young guys were in front of me. I assume only in the labour market for 1-2 years. All they wanted to know was how would Brexit effect their tax code. So what does Brexit mean for the working, UK, person? There is the fear of overall economic disruption (recession), but assuming you preserve your job, I would expect some easing of the tax burden. (Ideally it would be great to see the Government to hand back 100% of the savings to the tax payers - a more efficient method of capital allocation). Why does the Government feel they have to spend this money? A corporation would be slaughtered for squandering such a cash windfall.

Then there is the issue of David Cameron.
a) He was elected, just over a year ago, with an unexpected landside. Part of his mandate was to bring harmony into the ranks of the Conservative Party. We understand every MP just wants to be re-elected. Self preservation stands above all else. But have so many become polarised? If a casual observer like me is challenging his thoughts God knows what it is like within the political ranks. Cameron has failed on party harmony....which is not surprising given...
b) He has personalised his attacks. Why? This is at once infuriating and deeply disappointing. It is great and open debate that in part makes Britain Great.
c) Cameron set out to renegotiate a better deal for the UK. I did not once get the feeling he was ever even negotiating. What I saw was a man who liked to hob-knob it around Europe and feel grand when he was invited into the many grand palaces in Europe. Cameron's ego has become vast...and I'm not sure that is a lens that permits an unbiased view for what is best for Britain.

Unfortunately, all this 'noise' just detracts from the Remain debate and raises the Brexit question.

I do believe in a better and stronger Europe.
I think Cameron failed to renegotiate and that Brussels is too full of bureaucracy.

Ideally, I think the UK should Brexit...and then immediately make clear they want to apply to rejoin. Rejoining of course would be on a better understanding of everything from CAP to Capital requirements to support the financial structure of members from Greece upwards.

So, I'm for BRe-entry. i.e British Re-Entry. Let's join again...on current, relevant, terms as opposed to inherited terms and conditions that have lost their context in a 'post crisis' (?) world. If nothing else, Brussels needs to find mechanisms for countries in the Union to adjust and rebalance within the Union and to let all its citizens know the value of membership.

Unfortunately, the referendum is binary.

Pythagoras' theorem - 24 words.
Lord's Prayer - 66 words.
Archimedes' Principle - 67 words.
10 Commandments - 179 words.
Gettysburg address - 286 words.
US Declaration of Independence - 1,300 words.
US Constitution with all 27 Amendments - 7,818 words.
EU regulations on the sale of a cabbage - 26,911 words


I'm delighted for part because I can't see Trump as a real alternative.
One interesting how little Trump has actually spent on his campaign.
...and just one group Mr Trump offended along the way had a response...

Follow your conscience.
Sad story on Indian laissez faire attitude.

I can't believe the Wallabies have never played England in a 3 series test on 'home' soil.
....see opposing coaches, and former Randwick rugby teammates, Michael Cheika and Eddie Jones go head to head....
Aust v England kicks off this week-end....
...and I think something is going on with the round ball game it France?

More Unpacking... ever...when you're researching stuff you get drawn down a few rat holes (well at least I do!)

I must say, I found this a fascinating reading. Sad reflection on me, I know, but something about it just drew me in. This is a masterclass in unpacking / categorising and identifying risk. Great work Mr Brenner. Respect.

How the General Hazardous Materials Behavior Model (GEBMO) for Hazardous Materials emergency responders evolved.
This document presents...recollections about the development of the D.E.C.I.D.E. and GEBMO models, now widely used in hazardous materials emergency response training and operations. As you proceed, it will help to know that this work produced a new framework for thinking about hazardous materials emergencies, new response objectives, new incident decision processes, new ways for assessing response performance and above all, about a 90%+ reduction in casualties among emergency responders at hazmat emergencies.

This story needs some unpacking too.

Hulk Hogan in the news.
I'm not an expert on WWF but I must say, I have a soft spot for Hulk Hogan (as about the only name I recognize from the genre). I had no idea of his unpublished (private) works.

I love Private Eye.
Somehow they manage, perfectly, in my opinion, to keep investigative journalism alive along with great satire.
Mediums like Gawker, that seek to thrive on making a mockery or bringing misfortune into other people lives make me despair.
Vinod Khosla, a long-time Silicon Valley entrepreneur and investor, tweeted, “click bait journalists need to be taught lessons. Far less ethics and more click chasing in press today. I'm for #theil”

If it takes a US$140 myn fine (quite modest by banking standards) to act as a wake up call against unethical or deplorable practices...then happy days!
I'm for Theil too!

And now some unpacking that leads to a crazy result.
Jerome Kerviel, rogue trader, wins unfair dismissal case
Let's just say I know people who've been sacked for less.
How could you expect not to be sacked after losing close to 5byn?

My brother however distills some different thoughts...
"There is a lot of talk about corporate organisational culture, you do personality profiling as you deem people of a certain disposition are better suited to particular roles.  Well the type of personality for traders is a risk taker, in for the joy and challenge of the big win, not afraid of failure, less prone to see the downside of actions.  Well if an organisation puts in place recruitment policies to employ these types of individuals and then each year rewards success (ie who turned the biggest profit) and frowns on those that had the lowest outcome as made less “risky” investments (of course within the pool your trading).  If an organisation has a culture of rewarding big dollar wins and is less concerned on process (all the supporting documentation is on the shelf however it is not the playbook that live and breathe day to day) then the organisation must also share some of the responsibility for errant behaviour. 
Will this drive a rethink where we profile lower risk individuals with high moral values into these trading roles or do we go no that wont work as money is king so then as an organisation we need to beef up checks and balances so better to capture rogue behaviour. 
Of course there must be personal accountability however it is all too easy for a massive corporation with resources to stack the deck against lone individual." 

Friday, May 27, 2016

Unpacking, ECB, NSD, MiFID dates...enjoy the music

All is not what is seems....

As ever, more than a few events...and yet more DLT papers. One of the terms that has popped up in the last couple of weeks, that I very much like, is 'un-packing'. i.e. the process of breaking things down into their constituent parts. Nothing new there. We have forever been commoditising processes and focusing on those elements which add commercial advantage.

In DLT speak so much more needs to be done on understanding 'blockchain' and that extends onto standards and into data. I don't think enough is being made of data in the DLT discussions. What is in the data that we carry on a blockchain and how do we look into a block and manage or unpack that data? This is where I want the 'smart' in smart contracts to be.

I also attended an MND event. This also got me thinking about 'un-packing'. Pharmaceutical companies are much better at embracing, adopting and embedding new technologies that Fin Svs firms. Once a new drug may have been discarded based on 'poor' test results. Now with DNA markers, data can be unpacked, and a drug that previously looked unsuccessful may indeed be highly successful (life changing) in a some specific use cases. I expect designer drugs for individual clinical problems to be a reality in my life time (albeit unaffordable - I suspect the next generation will get the commoditised product).
Unpacked data can provide new insights...if it is able to me measured and mined.
BTW, this re-inspired me to understaken to swim the Solent again this year to support MND.
I'll reach out closer to event date to those who may feel this a worthy cause.
(Likewise, if you know people afflicted with MND and you'd like to raise awareness through the City against MND please let me know and I'll refer you to the right people.)

One of the papers I did manage to get through was the Swift paper.
(you can also pick up the Spanish version here).
The Swift paper, like the DTCC paper, like the Euroclear paper approaches the topic as you'd expect a piece of Central Market Infrastructure to. Basically, the only trusted partner you have to manage such an important distributed technology is, umm....Us!
That said, the Swift paper does do some nice 'un-packing' of it's own.
Like the UK Government paper:,
I think the best thing about this paper is the nice little icons.
Swift have 'un-pack' DLT into 8 nice little icons. (I only got 4 from the UK Gov't paper).
They are:
Data Controls
Reliability and
All worthy elements. Some exceptions that I thought worthy of inclusion: Business model which doesn't appear to get a mention. Dunno why. Nor does Data Structure / Technology design. Maybe that is assumed...but as above, I think that is critical in how you access and 'un-pack' the data on chain to distribute into your ecosystem. And dispute resolution (maybe that is buried in governance? - more unpacking?).

Anyway, Ownership and Governance. Yes, critical and think permissioned issues. Data Controls. Think how do I marry the real world to the digital one (not mentioned) as much as protection against gaming and reverse engineering. Compliance. Yep, give different actors a 'lens'. Standards. Again, Swift would like to be the standard bearer...but there may be other ways around this (WIP). Identity. Yes. Authentication and Identification. Security. Yep. Un-hackable...but which chain and why? Reliability, Yes, we like a network that doesn't fall over and Scalability (may as well include latency as well). All in all, not a bad unpacking exercise.

Although I must say, as a joint partner is writing the paper (as boldly stated on the front page) I found this disclaimer cringe worthy:
Accenture’s role in the paper has been limited to the provision of insights and expertise.....we do not guarantee that this source and this information are accurate and/or complete and it should not be relied upon as such. The conclusions and recommendations provided in the paper represent the views of SWIFT and cannot be attributable to Accenture.

Enough un-packing!
I trust every one is now packed and off to enjoy a great Bank Holiday weekend.
Whatever your leisure....may it be a pleasure!



The ECB has published: ECB Occasional paper no 172, "DLT in securities post-trading"

The National Settlement Depository (NSD), Russia’s sole central securities depository (CSD), has announced it has tested a blockchain-based voting system....the NSD used the NXT blockchain system to create the open-source prototype, with the goal to enable shareholders to more easily vote as part of annual shareholder meetings.

A fintech consultancy is raising a $50 million blockchain fund to sort 'the good ideas from the magic beans'
About $5 trillion of transactions are cleared every year in London’s gold market, which Barclays is exiting as it pulls out of precious metals. ICBC Standard last week joined the city’s precious-metals clearing system and last month won classification as a market maker by the London Bullion Market Association.
ICBC Standard, formed last year after Industrial and Commercial Bank of China Ltd. -- China’s biggest bank -- bought a controlling stake in Standard Bank Plc’s global markets business, expects the purchase of the vaulting business and related contracts to be completed in July
(This is always a useful insight)

Market Structure

On 18 May 2016, the Permanent Representatives Committee (Coreper) approved, on behalf of the Council, an agreement with the European Parliament on a one-year delay to new securities market rules.
MiFID New dates
....the deadline for the member states to transpose MIFID II into national legislation will be set for 3 July 2017;
....the date of application of both MIFID II and MIFIR will be set for 3 January 2018.

TARGET Annual Report 2015 (May 2016) - European Central Bank

DTCC 2015 Annual Report

Following its first 12 months in operation, the Payment Systems Regulator (PSR) has today published its Annual Plan which outlines the regulator’s key work and objectives for the year ahead.

Basel III Capital Requirements Affect You
(pretty basic / bland but I guess it gets a point across)

Icap to rebrand as financial technology company

Citadel Securities acquires automated trading desk assets from Citi



..and many thanks to the WMA.

Craig Wright had come out as the Satoshi Nakamoto creator of bitcoin
#DLT for #FinServ: Important background to R3 Corda by @gendal
*** Personally, I don't buy this. Load of rubbish. If he was...why is the tax man impounding his house, why wait till now...why not just smash the Bitcoin Days Destroyed?

.....22 of 30 Disney films analysed have more male that female dialogue. Even films with female leads, such as Pocahontas and Mulan, had more male speech.

What is great about English sport...

Funny, first thing people pointed out about my 'handle', is I share DLT with...

This guy, Michael Spence, suffers from 'Signalling' sickness. (Rhodes scholar, Harvard, Oxford, et al)
What is this signalling sickness? Students use degrees and courses to differentiate themselves from other students. But as more people attend university and complete courses, the brighter students have to accumulate more degrees to distinguish themselves. This results in more people spending more of their lives in educational establishments rather than in jobs, which in many cases do not inherently require much study.
Also among his beliefs are that high-frequency trading should be banned!

What I loved about this clip, is how the children respond to the music. Their unconscious reactions, as they get caught up in the moment, remind me of the joy of music and the arts.

So, whatever you're doing this Bank Holiday - enjoy the music!

Wednesday, April 6, 2016

Legal twit, ICDA, ASX, Google, GLEIF...Sydney and Boyles Law

I've been pondering the Legal Framework of Bitcoin / Blockchain.

Back to basics...if you don't have a legal framework, you don't have a product. So then, what is the legal status of Bitcoin (or indeed any crypto-currency)...and hence what is the status of a dematerialised 'token' on a blockchain?

The more fundamental question is... is it property (an instrument of bata, a security, a 'something tangible) or is it a currency (which is a slightly different animal to property)?
...and why do we care?...

In many legal systems, receipt of stolen property is treated very differently to receipt of stolen money. If a pawn shop accepts a stolen bike, its operators are expected to return it to its rightful owner if discovered, without reward. If a coffee shop takes a stolen fiver, it can keep it.

In short:
In the UK and EU it is leaning towards 'currency' (or rather not property).
In the US it is leaning towards 'property' (or rather a security / financial instrument, not currency)
Typical, looks like we're not getting off to a great start in uniform global standards.

At the end of all this mumbo jumbo, it just gets back to the plain simple context. What are we trying to do? If we are using blockchain / DLT for currency and cryptocurrency things...looks like the UK/EU is barking up the right tree. But this might be a bit Bitcoin centric. If we are looking at using blockchain / DLT in more wide ranging applications....then the US approach looks more future proof.
Ultimately, it is not the technology that should be is the application. (I appreciate we all know this already...but it is just interesting to see how it is already playing out). Some of the links / sources I found interesting below.

Several people have recommended Twitter to me.
So, I have joined the twitterati.
I'm still finding my 'wings' in this medium but I'f you're on twitter, please feel free to tweet me.

If you're at the FinTech storm event tonight please do say hi!

Have a great week all,


UK Guidance from HMRC.
...As an EU tax, the VAT treatment for cryptocurrencies adopted by the UK must be consistent with any treatment that may eventually be implemented across the EU...
The 3 aspects commented on are: Corporation Tax (CT), Income Tax (IT) and Capital Gains Tax (CGT).

Nice round up from the US here:
Bitcoin: Questions, Answers, and Analysis of Legal Issues:
...On June 3, 2015, New York State became the first state to establish a framework for regulating digital currency businesses when the New York State Department of Financial Services (NYSDFS) issued regulations providing for prudential supervision of virtual currency businesses operating in New York State. p 14
...the CFTC stated that Bitcoin is a virtual currency...p29

A nice round up for every jurisdiction in the world here:
(note, the foot notes are the most useful part).

This site could also be really useful...but it doesn't appear to be upto date.
Regulation of Bitcoin in Selected Jurisdictions

The UK Digital Currency Association’s response to HM Treasury’s Digital Currencies : Call for Information

Digital currencies: response to the call for information

First of all a plug for the upcoming ICDA Blockchain Conference, London, April 19-20, 2016
Beyond the technology buzz, how is the blockchain shaping the future of banks, exchanges, derivatives markets and commodities from a business development perspective?
*** If you're not an ICDA member please let me know and I can arrange a discount code for you.

Another piece that grabbed my interest given the pioneering DLT work of the ASX.
ASX chief Elmer Funke Kupper resigns
"Normally, you ride this thing out," he told The Australian Financial Review. "It's not right, it's unfair, it's trial by media but it's also the responsibility of running one of the most respected institutions in the country. But this is me rising above it. It destroys my life but for me it's rising above it." 

A bit of bitcoin folklaw...with a source (well, as much as you want to trust a Guardian editor!) to back it up.
Bought in 2009, currency’s rise in value saw small investment turn into enough to buy an apartment in a wealthy area of Oslo

Meet the Man Who Will Hack Your Long-Lost Bitcoin Wallet for Money

When software and hardware are intertwined, does a warranty mean you stop supporting the hardware or does it mean that the manufactuer can intentionally disable it without consequence? 17 months ago, Google acquired Revolv, a very cool home automation hub.
*** I found this interesting because of the context. Can 'bricking' software make your hardware investment redundant? Think Planet of the Apes, some hardware can run long after the software support has lapsed. I like to retire my kit when I choose, not when my software developer does.
It's also an interesting insight into how Google is looking at the content of each of the divisions under Alphabet. (e.g. Google Nest).
Also a couple of nice piccies that explain Alphabet, Google's new parent company.

One area that I want to expand on is "Master Data". There is much discussion about this...but before expanding too much on the point I think more work needs to be done on understanding various data elements. (and where we go for Golden Source...and what that means for consensus).
I very much like the work of GLEIF.
In October 2015, the Global Legal Entity Identifier Foundation (GLEIF) launched the Global LEI Index, which provides information, updated daily, on all LEIs issued to date. Any interested party can easily access and search the complete LEI data pool free of charge using the web-based LEI search tool developed by GLEIF.

Some sites I've been browsing and putting into context in my own mind map of the evolving blockchain eco-system. Some great content out there...and a whole host of generalisations too!   (Etherium permissioned ledger developed with
Counterparty ­
Mastercoin ­
Sidechains ­
Swarm ­
Coinprism ­
StorJ ­
MaidSafe ­
Factom ­
Openname ­
Bitmessage ­


*** Interesting exercise. Bringing modern media methods to history (kinda like trying to make history accessible via Horrible Histories!). I wonder how different things would have been with coordinated communication channels. Military emphasis on comms has always been valued...just don't get me started on the Byzantine Generals problem!
*** Bonus!
You can get some C++ source code to solve the problem here.

Starfish-killing robot close to trials on Great Barrier Reef
*** I love the reef and diving.

Spencer Tunick visits Hull...the city of culture.
*** Hull, culture, nudity...and I thought they just did Rugby League.Will you be there?

Is Hell exothermic or endothermic?
An oldie, but a goldie. Dunno why I was talking about Boyles law this week but this nails it for me.
BTW, if Hell was finite...then given the rate of souls entering Hell I believe all Hell would already have broken loose. I also believe in the goodness of human nature. Therefore, ultimately, I believe Hell will indeed freeze over.
...and Geoff...Avogadros number just for you (since you're more of an 'ideal' gas typa guy)!

Stacked Deck
The effects of race on eBay auction pricing.
*** I fear this is sad, but true. The sample size is a bit too small to really carry weight in my mind - but as a generalisation, I do think it reflects a deeper problem in society today. Despite all the noises we make about tolerance and respect there is still something 'there'. But we'll get there, slowly but surely - look how far we've come in a generation. Gotta love kids (and the education system for throwing them together).

Go Filter!
A perfect contra to Stacked Deck.

A blockchain "Token" joke! WooHoo!
Q: A man pushed his car to a hotel and lost his fortune. What happened?
A: He's playing monopoly!
(OK, it's not a digital token)

Be wise to yourself and take the risk.
~Behold the turtle. He makes progress only when he sticks his neck out~

A fool can throw a stone in a pond that 100 wise men can not get out.
Saul Bellow