blockchain technology could be applied throughout the life cycle of securities (e.g., equity, debt, derivatives, repos, loans, asset-backed securities) and commodities in the areas of 1) issuance, ownership and trade; 2) post-trade clearing and settlement; and 3) custody and securities servicing. A shared synchronized blockchain among participants could eliminate the need to reconcile various independent ledgers and improve process workflows, with a clear view of asset and/or process ownership throughout the chain, as well as leverage smart contract technology to eliminate some manual processes.blockchain technology could be applied throughout the life cycle of securities (e.g., equity, debt, derivatives, repos, loans, asset-backed securities) and commodities in the areas of 1) issuance, ownership and trade; 2) post-trade clearing and settlement; and 3) custody and securities servicing. A shared synchronized blockchain among participants could eliminate the need to reconcile various independent ledgers and improve process workflows, with a clear view of asset and/or process ownership throughout the chain, as well as leverage smart contract technology to eliminate some manual processes.– Nasdaq, Inc. (Baa3 Positive) is actively pursuing blockchain-based capital market solutions. It developed, in collaboration with blockchain start-up Chain Inc (unrated), a blockchain for trading of shares of pre-IPO private companies on Nasdaq Linq.

In December 2015 an issuer, namely Chain, successfully transacted a private security to an investor on the Nasdaq’s Linq blockchain. The ownership record was digitally represented, settlement time reduced significantly and the need for paper stock certificates was eliminated. Separately, Nasdaq is also developing a blockchain-based shareholder e-voting service for shareholder meetings of companies listed in Estonia on the Nasdaq’s Tallinn Stock Exchange.

– A collaboration of seven firms successfully executed post-trade life cycle events for North American single-name credit default swap (CDS) transactions on a permissioned blockchain with smart contracts. The firms include Bank of America Corporation (Baa1 Stable), Citigroup Inc. (Baa1 Stable), Credit Suisse Group AG (Baa3 Stable), The Depository Trust & Clearing Corporation (DTCC, Aa3 Stable), JPMorgan Chase & Co. (A3 Stable), Markit Ltd. (Ba1 Stable) and blockchain start-up Axoni (unrated). A set of 85 structured test cases were executed to asses life cycle functionality, integration with external systems, network resiliency and data privacy.

– ICAP plc (Baa3 Stable) successfully tested Axoni’s blockchain and smart contracts for post-trade operations of bilaterally executed spot/forward foreign exchange block trades. Using a permissioned blockchain with nine participant nodes, the test proved that the blockchain is a common golden source of user transactions that enhances data accuracy and transaction speed, provides a distributed copy to users’ local servers, limits visibility of secured messages to permissioned participants only, and improves reconciliation and operations processes.– ICAP plc (Baa3 Stable) successfully tested Axoni’s blockchain and smart contracts for post-trade operations of bilaterally executed spot/forward foreign exchange block trades. Using a permissioned blockchain with nine participant nodes, the test proved that the blockchain is a common golden source of user transactions that enhances data accuracy and transaction speed, provides a distributed copy to users’ local servers, limits visibility of secured messages to permissioned participants only, and improves reconciliation and operations processes.

– Overstock.com (unrated), though its subsidiary TØ.com (unrated), focuses on issuance of private and public securities on a blockchain. In June 2015 it issued its own blockchain-based private bond that was further settled and cleared on the TØ.com blockchain platform. Furthermore, in December 2015 it received SEC approval to issue public securities on a blockchain. Its blockchain-based stock will, once issued, be traded, settled and recorded entirely on a blockchain.– Overstock.com (unrated), though its subsidiary TØ.com (unrated), focuses on issuance of private and public securities on a blockchain. In June 2015 it issued its own blockchain-based private bond that was further settled and cleared on the TØ.com blockchain platform. Furthermore, in December 2015 it received SEC approval to issue public securities on a blockchain. Its blockchain-based stock will, once issued, be traded, settled and recorded entirely on a blockchain.

Other projects include the patent filing by The Goldman Sachs Group, Inc. (A3 Stable) for its ‘SETLcoin’ cryptocurrency, which offers immediate transfer of securities and nearly instantaneous execution and settlement; the demo presentation by UBS Group AG (Baa2 Stable) of a smart bond built on Ethereum with fully automated payments; and blockchain start-up Digital Asset Holdings’ (unrated) ongoing development of a blockchain to replace the legacy equity security clearing and settlement system of the Australian Securities Exchange (unrated).

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