Categories: CryptoNews

Major Banks Trial Credit-Default Swaps Blockchain Trading System

Several large financial institutions (JP Morgan, Citigroup, Bank of America, Credit Suisse Group) have participated in a blockchain trial involving credit-default swaps (CDS) derivative contracts.

The CDS contracts became well-known after the 2008 financial crisis, when the instruments were widely-used by banks and investment firms to gain exposure to the mortgage backed securities (MBSs) market.

According to a WSJ article, the experiment revealed that a certain portion of the clearing and settlement process of CDS contracts can be simplified using the novel technology. Chris Childs, CEO of the DTCC division that deals with OTC derivatives, said that the results of the test were “very positive”.

The test involved a simulation of the trading activity that took place in a 30-day trading period in a particular CDS instrument, which has a face value of $6.7 trillion for all outstanding contracts. The blockchain trial was conducted by trade data provider Markit, and Axoni, a blockchain developer that recently trialed a smart-contract Forex

trading system for ICAP.

Markit has been involved with distributed ledgers for some time now, and Jeffrey Billingham – who heads the firm’s blockchain effort – said that this trial shows how the technology can be applied to “improve efficiencies and minimize costs.”

Autonomous Research analysts have postulated that distributed ledgers may cut trading costs by 33%, and reduce capital requirements by about $120 billion on a yearly basis.

Related Post

While the technology has the potential to streamline the trading of just about any financial derivatives contract, it can also result in significant job losses:

“A recent report by Citigroup forecast that automation including blockchain could eliminate two million banking jobs, largely in processing, over the next decade.”

 

Image credit: 1

If you liked this article follow us on twitter @themerklenews and make sure to subscribe to our newsletter to receive the latest bitcoin and altcoin price analysis and the latest cryptocurrency news.

 

Traderman

Avid blogger, entrepreneur, and cryptocurrency enthusiast. I love writing about cryptocurrency, NFTs, price analysis, and much more!

Share
Published by
Traderman

Recent Posts

Ethereum Down While Bitcoin, Solana, and JetBolt Skyrocket In End November 2024

Ethereum stumbles as Bitcoin surges past $97K, Solana eyes new highs, and JetBolt’s presale shakes…

6 mins ago

Top 5 Best Crypto Presales to Grab Now: Don’t Miss These December Week 1 Gems

The crypto market is a buzz with promising presales as 2024 draws the curtains. With…

26 mins ago

Cheems Surge On BSC Network: A Rising Star With Growing Market Value

The Cheems token on the Binance Smart Chain (BSC) is gaining significant momentum, surging by…

9 hours ago

Lester Token Crashes 40% Following Official Announcement

The value of $LESTER plummeted by 40% in the past 24 hours, leaving its market…

9 hours ago

From $30K To Millions: The Wild Journey Of $Quant And Xiaohaige’s Memecoin Stunts

In a bizarre turn of events, a young live-streamer known as Xiaohaige created the memecoin…

9 hours ago

Whale “convexcuck.eth” Makes Bold $CVX Move, Nets Significant Profit Amid Price Surge

The crypto whale known as "convexcuck.eth" has made waves in the DeFi world, spending $2…

9 hours ago