In other FinTech news, Watson Wheatley to host i-Recs, SIFMA report finds electronic trading on the rise for corporate bonds, and Broadridge takes a stake in AMA.
Officials of the Japan Exchange Group (JPX) and IBM Japan recently announced that they are jointly developing proof of concept (PoC) tests for the Blockchain distributed ledger technology.
This effort marks another major project for the financial services industry, which has been rapidly exploring how Blockchain can be applied to a variety of securities operations.
“Blockchain technology is gaining attention worldwide as one of the most promising aspects of Fintech that could be applied to constructing shared infrastructure to provide high availability and reliability at low cost,” JPX officials say. “However, there are issues to be resolved in the technology, and it will need to be continually verified and improved before actual application in financial business operations.”
JPX officials will conduct tests in cooperation with IBM Japan “to evaluate the limits and possibilities of the technology in markets that have low transaction data volume using the framework provided by the Hyperledger Project,” JPX officials add.
Late last year, Blockchain technology got a big boost from the Linux Foundation, the San Francisco-based open source nonprofit founded in 2000, which launched the broadly based open source Hyperledger Project initiative. “The project will develop an enterprise grade, open source distributed ledger framework and free developers to focus on building robust, industry-specific applications, platforms and hardware systems to support business transactions,” foundation officials said.
The effort will involve initial commitments to participate from Accenture, ANZ Bank, Cisco Systems, CLS, Credits, Deutsche Börse, Digital Asset Holdings, DTCC, Fujitsu Limited, IC3, IBM, Intel, JPMorgan, London Stock Exchange Group, Mitsubishi UFJ Financial Group (MUFG), R3, State Street, SWIFT, VMware and Wells Fargo.
Linux is the nearly ubiquitous, open source operating system created and by Linus Torvalds, and its latest iterations can be found today on many smartphones, personal computers and other digital devices. Over the past decade or so, Wall Street firms have been embracing cost-effective, Linux-based servers to support their trading and related securities operations.
IBM, in particular, is investing considerable research and development efforts to explore Blockchain applications and will contribute tens of thousands of lines of its existing codebase and its corresponding intellectual property to the open source community, say Linux Foundation officials.
JPX was created by combining the Tokyo Stock Exchange Group and Osaka Securities Exchange on January 1, 2013, officials say.
The JPX operates exchange markets for trading listed securities and derivatives instruments, providing market infrastructure and market data, clearing and settlement services through a central counterparty and trading oversight “to help maintain the integrity of the markets,” officials say.
Watson Wheatley Launches Hosted Version of i-Recs
Reconciliation vendor Watson Wheatley Financial Systems (WWFS) has launched a hosted version of its i-Recs software to allow for savings on upfront and ongoing IT costs, faster implementation and easier upgrades, officials say.
“We are very pleased with how our first installation of i-Recs hosted version has been running at our latest client site,” says Tom Wheatley, director for the vendor. “The use of the hosted technology offers a lower cost of entry into automated reconciliation and allows us to on-board new clients even faster than before,” Wheatley adds.
WWFS officials say their worldwide clients include hedge funds, long only asset managers and commodities traders. Its principal products are i-Recs and Importer.
SIFMA Report Finds Electronic Trading Favors Corporate Bonds
Financial services industry group SIFMA has released the results of a survey of electronic bond trading platforms for U.S. corporate and municipal securities that finds most of the automated venues are focused on the corporate bond market.
“At this stage, the survey revealed that the platforms have primarily focused on the corporate bond market which has approximately $8 trillion outstanding and over $1.4 trillion issued in each of the last three years,” according to SIFMA. Platforms are using innovative solutions to improve pre-trade price transparency and are addressing various dimensions of the liquidity challenges in fixed income markets, SIFMA officials add
The “innovative and creative ways” of the electronic platforms are to aid price discovery and to enhance access to market liquidity, said Randy Snook, executive vice president, business policies and practices at SIFMA. “This report is intended to provide useful information to market participants about the existing and a number of emerging electronic trading platforms and trade execution protocols, as increased competition among the players shapes this space,” Snook says. “The information from this survey will help to inform a constructive dialogue around fixed income market structure with both market participants and policy makers.”
The SIFMA survey offers profiles of electronic bond trading platforms and information on the target markets, trading protocols, technology interfaces, planned enhancements and related capabilities, officials say.
Some of the key takeaways are:
- Several new entrants are offering or plan to offer electronic trading related services to challenge established players, seven of the 19 platforms interviewed have entered the market in the last two years, and four more platforms plan to launch in 2016;
- Enhancements are being made to established trading protocols and several new protocols are emerging to promote price discovery, including live order books, session based trading and independently determined midpoint pricing;
- The survey found that 14 platforms offer “all-to-all” trading that highlights efforts to increase market participation among a diverse universe of investors;
- And the 19 electronic trading platforms surveyed offer 42 electronic trading protocols that have been “structured in a variety of ways to address the differing demands of market participants.”
SIFMA is making the report available on its website at: http://bit.ly/21ds4Sw
Broadridge Bolsters Offering for Europe via Stake in AMA
Broadridge Financial Solutions has bolstered its corporate governance offering in Europe via a minority stake and an exclusive distribution and marketing alliance with AMA Partners, B.V. (AMA), officials say.
Based in the Netherlands, AMA offers DirectorInsight, an analytics platform that offers data and analytical tools to analyze corporate governance and executive compensation. “The deal expands Broadridge’s corporate governance solution set and data capabilities to give corporations and institutional investment firms in key European markets access to an expanded, customizable data and analytics platform,” officials say.
The DirectorInsight offering is described as an interactive online corporate governance data and analytics tool, “providing an independent platform for analyzing governance risks, executive pay and benchmarking through a pay-for-performance screening tool, board intelligence, company financials, filings and interlocks,” according to Broadridge officials.
In addition, DirectorInsight offers a tool for constructing peer group scenarios to screen against a company’s peer group, officials say. “The solution has historical data going back to 2008, plus forecasted performance and standardized compensation data and covers more than 1,200 listed European companies with profiles of over 35,000 directors and executives,” officials add. The service targets investors, issuers, corporate secretaries and professionals in human resources and governance.
Broadridge Financial Solutions offers investor communications, securities processing and managed services solutions.
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