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

Aptos (APT) and Tron (TRX) Prices Slide, As Volume Soars For Rollblock Suggesting Parabolic Rally

As Aptos and Tron prices take a recent downturn, the spotlight shifts to Rollblock, whose…

7 hours ago

Altcoins to Watch in November: Binance Coin (BNB), Rollblock (RBLK), and Neiro (NEIRO)

As the crypto markets roll into their most bullish time of year, we present three…

7 hours ago

Analysts Forecast $1 for Cardano and Lunex Network As Dogwifhat Plunges To Former Lows

As the crypto market prepares for a major rally, experts believe that two top altcoins,…

7 hours ago

Retail Traders Panic Sell During ‘Fake Dip’; Whales Hold Tight to SOL, DTX, and SHIB for a Millionaire-Maker Bull Run

Solana (SOL): A Strong Ecosystem Despite Volatility Solana (SOL) has been all over the place…

8 hours ago

Llama 3.2 Predicts Price For Dogecoin: $2 Peak By 2025 And $5 Rally For DTX Exchange This Winter

Cryptocurrency trends are keen on the forecast that was recently released by Llama 3.2 model…

8 hours ago

Crypto Whale Sparks 8x Surge In $OPK Price with Massive Buy-in

A mysterious crypto whale, who previously invested 9,600 SOL into tokens $Pnut and $FRED, has…

10 hours ago