CSOP and Hashstacs announce blockchain-based OTC derivative processing prototype
“Partnering with STACS on this platform will allow CSOP to address the huge fragmentation across the entire industry, where different banks and brokers have developed their own set of varying practices along the entire trade matching and settlement process.”
CSOP Asset Management and Hashstacs have completed its Over-the-Counter (‘OTC’) Derivatives Trade Processing prototype built by STACS on its blockchain-based platform, Vetta.
The teams collaborated closely over the course of two months to build a blockchain-powered platform that allows for automated concurrent processing and real-time, perpetual reconciliation of OTC derivatives trades.
The platform aims to eliminate and streamline bespoke trade matching parameters and resolve trade exceptions in real-time.
Platform addresses fragmentation across the entire industry
Benjamin Soh, Managing Director at STACS, said: “We are thrilled to be part of this collaboration with CSOP Asset Management to deliver a cutting-edge live functional platform for efficient OTC Derivatives Trade Processing via distributed ledger technology.
“The solution enables efficiencies, risk management, servicing capacity, and an overall increase in profit for all market participants, while ensuring cross-platform interoperability and adherence to international standards of information security. This is definitely a meaningful collaboration that can create vast value and opportunities for the asset management industry and capital markets as a whole.”
David Ng, Deputy CEO at CSOP Singapore, said: “Partnering with STACS on this platform will allow CSOP to address the huge fragmentation across the entire industry, where different banks and brokers have developed their own set of varying practices along the entire trade matching and settlement process.
“With STACS, we hope to reduce these cumbersome and risky processes whilst achieving data transparency and security. In addition, we will be able to collaborate with our partners to build dynamic ecosystems, better operational intelligence, analytics, and audit readiness. This would enable asset managers to channel their efforts towards truly high value-adding activities instead of manual workload, as well as to equip and familiarise themselves with new technologies for a more digital future.”
Further enhancements of the platform in the pipeline include handling more sophisticated trade exception workflows and enabling the seamless resolution of trade breaks.
Given that the OTC trades are highly bespoke and unstandardised, the collaboration would also see the incorporation of machine learning algorithms and optical character recognition technology to facilitate automatic data ingestion and transformation of unstandardised and unstructured trade parameters.
Visibility of incoming trades will also be provided to both parties, with each transaction record being stored in an audit log, thus increasing transparency and auditability of data.
Future phases would move beyond trade matching to also facilitate the seamless settlement of trades.