Hyperledger has launched the Hyperledger Capital Markets Special Interest Group (SIG) to facilitate focused technical and business-level conversations related to appropriate use cases for blockchain technology across capital markets.
SIGs gather community members from an industry segment to work on domain-specific problems and create an environment for open discussion, document co-creation and solution proposals. Hyperledger now has eight SIGs, including ones focused on healthcare, telecom, trade finance, supply chain and social impact.
Capital markets are a way to connect investors and borrowers and include the bond market (the largest market) and the stock market. It can also include derivatives. Borrowers get access to capital and investors get returns from their investment. These returns can be in the form of dividends, coupon payments or appreciation of the instruments. The downside risk is default by the borrowers as well as the reduction in the price of instruments. Borrowers are enterprises or governments and investors are individuals or public and private institutions. Capital markets are an important component of the economy.
Blockchain, at its inception, was aimed at global uncensored retail payments through the medium of a digital currency. The original solution has since evolved into a store of value and its exchange among participants in a safe, secure and transparent manner. Many blockchain solutions have been created to cover the issuance and transfer of digital assets, futures and other derivatives. This and other solutions encompass capital markets infrastructure and processes.
The Cambrian explosion of blockchain solutions range from public permissionless-type platforms to private permissioned. Many of these solutions are in the capital markets sector. Hyperledger houses a diverse set of primary blockchain frameworks, utilities and libraries. The new SIG helps unify thinking and solutions targeted to capital markets in Hyperledger and is a forum where capital markets business experts and blockchain technical folks come together in an open community.
The scope of the Hyperledger Capital Markets SIG (CM-SIG) includes:
- Drawing out a front-to-back taxonomy for a generic capital market infrastructure with variations on specific product lines
- Identifying the impact of Distributed Ledger Technologies (“DLTs”) and their place in the architecture (business, integration, infrastructure, regulation, market events, interaction between product lines)
- Analyzing risk calculations and scenarios including the impact of DLTs in pre-market, trading, hedging, day-to-day risk management, trading limits and FRTB
- Tracking specific use cases, current pilots and proofs of concept, and production case studies with opportunities and risk; as well as solutions for the identified problems
- Collecting documentation on cross-cutting architectural principles, performance and scalability, security, identity management, off-chain data, deployment and operation in regulated enterprises
- Advancing standards in capital markets for data in flight and at rest, events and responses, privacy in light of DLTs
- Planning and participating in conferences or meetups to connect face to face, submit papers, talks, presentations
- Interfacing with companion SIGs like Trade Finance or Supply Chain to draw out common areas of concern and interactivity of solutions
- Documenting functional knowledge drawn from SIGs like Telecom, best practices from Social Impact as well as the knowledge drawn from Architecture, Identity and Performance and Scale Working Groups
The new Hyperledger Capital Markets SIG is led by the chair Vipin Bharathan, Founder dlt.nyc, a blockchain consulting firm, and vice chair Natalia Garcia, Assistant Director in Debt Capital Markets, and is composed of more than 21 founding individuals from different locations and a diverse line-up of financial institutions. SIG membership and participation has grown quickly and is open to all. We have already had several calls and are involved in some projects that the community has found interesting.
Currently we are engaged in developing and identifying :
- Taxonomies classifying the dimensions of capital markets,
- Standards covering the different types of products
- Prominent use cases
- Challenges or obstacles that are common to DLTs and their application to capital markets use cases
- Regulations that apply to the various aspects of this highly regulated industry
- ROI of any particular solution, especially on intangible aspects like trust, transparency and decentralization in capital markets
Greater details on any one of these projects can be found through our projects page. CM-SIG is aimed at working together to discover correlations between these projects to deploy actual solutions from the Hyperledger greenhouse inside capital markets.
You are welcome to volunteer for any of the existing projects. We also welcome new projects, especially if they are presented before the community and have a group of committed volunteers backing them. When needed, a task force can also be created within the SIG and have working sessions to discuss specific work items.
We welcome your participation. If you would like to join the Capital Markets SIG, please subscribe to the mailing list and join the chat channel where online meeting details will be announced. The CM-SIG wiki page contains links to resources, activities, meeting minutes, project details and the active member directory. Find a list of all Hyperledger community meetings, including the Capital Markets SIG, on the Hyperledger Community calendar. We look forward to your active involvement and valuable contributions.