ICAP creates blockchain 'Rosetta Stone' to improve post-trade processes?

Rage Review : ICAP (ICAP) has created a new system to manage the post-trading process of securities, which will run in sync with ICAP's automated process, and any seller can conduct various transactions with any intermediary. Although the current smart contract is compatible with Ethereum, if Ethereum changes, we have created a system that we think is compatible with any related blockchain technology just in case. The test version of the business process driven by smart contracts is expected to be available in the first half of next year, and the full version will be released at the end of 2017.

Translation: Nicole

ICAP has created a blockchain “Rosetta Stone” designed to improve post-trade processes.

The Rosetta Stone refers to an ancient hieroglyphic text that includes multiple ancient languages ​​​​that can be used to decipher written messages engraved in Egyptian ruins.

ICAP uses the term "Rosetta Stone" to describe its new system for managing the post-trading process of securities. Like the Rosetta Stone, this is a system that is written into a separate business process, and any seller can conduct various transactions with any intermediary.

ICAP wrote what they believe is an elaborate smart contract, using the now-popular blockchain term, so the next step is to introduce actual blockchain technology into the new system for managing securities post-trading processes.

The post-trade risk and information services unit announced in March that it had successfully tested a blockchain prototype using multi-asset information and the Harmony matching network, which it had been working on.

In an interview with CoinDesk, Jenny Knott, ICAP’s chief executive of post-trade risk and information, explained why elaborate post-trade systems are designed to use various blockchain technologies.

Jenny Knott

Knott said:

“While the current smart contracts are compatible with Ethereum, we created a system that we think will be compatible with any relevant blockchain technology just in case Ethereum changes.”

Knott, who spent eight years at Santander, first proposed creating a parallel blockchain service that would run in parallel with ICAP’s automated processes after being appointed ICAP CEO in 2015.

Building a team

Three months after Knott took the job, ICAP’s investment arm, Euclid, recommended her to a newly formed private blockchain company, Axoni, and she began her journey to explore the reasons for distributed ledgers.

In December, David Thompson, chief operating officer of Traiana, a subsidiary of UK-based ICAP, joined Axoni to help build a post-trading prototype.

Thompson selected a team of seven people from Traiana’s 350 employees to complete a test in February of this year, transferring bank transaction data to a smart contract through a network node.

Starting with foreign exchange trading in Traiana, the company is now building a blockchain system that runs in parallel with the current reimagined business process, the Transaction Lifecycle Center, but does not yet interact with consumers.

The value of smart contracts

Currently, Traiana’s team is working with Axoni to identify issues that may arise after blockchain integration and to expand the application of blockchain beyond just foreign exchange.

However, the team had to make sure customers knew that the service was not just a toy to play with, but a service that could deliver real value.

Thompson added:

“When you use blockchain technology in your system, you are actually asking customers to trust a new source of valuable information. To gain trust, you need to let customers know that although the new technology does the same thing as the traditional technology, it will be more efficient.”

According to data released last Tuesday, transaction volume on non-blockchain-integrated affiliates increased 183% between 2015 and 2016, with 3 million transactions worth $15 trillion currently taking place every day on the Harmony network.

Keeping up with the times

As part of ongoing testing, Traiana is working with one of 500 partners to identify flaws in the system.

A test version of the business process driven by smart contracts is expected to be available in the first half of next year, and the full version will be released by the end of 2017.

While ICAP’s early-stage investment firm Euclid Opportunities invested in blockchain company Digital Asset Holdings, and ICAP has partnered with Axoni, Knott said it was also important to keep his firm’s options open.

Knott said there are still many unanswered questions about whether there is one blockchain that dominates the financial sector or one with many competitors.

Meanwhile, Knott’s company is busy preparing business processes for its eventual blockchain integration while educating regulators about these efforts. Last week, Knott convened a group of European regulators for an educational session in Brussels.

She told CoinDesk:

“The key is making sure we are agnostic about the underlying technology. Making sure we are rebuilding business processes that allow banks to instantly agree and verify transactions, while also creating a legally binding transaction through digital signatures. That is critical.”