Part 2 of a Future of Finance interview with Vadim Sobolevski, co-founder of FutureFlow. No one central bank digital currency (CBDC) is ever quite the same as another. But so far every CBDC project has focused largely on the technicalities of making payments – by or to unbanked consumers or businesses, or between counterparties across national borders, or to prevent consumers and businesses undermining the role of central banks by making payments with alternatives such as cryptocurrencies or Sta...
Jun 28, 2022•49 min•Season 1Ep. 109
Part 1 of a Future of Finance interview with Vadim Sobolevski, co-founder of FutureFlow. Many business decisions are baffling. But on the face of it none is as bewildering as the decision by banks, asset managers, wealth managers, private banks, insurance companies and FinTechs to spend hundreds of billions of dollars a year on Know Your Client (KYC), Anti Money Laundering (AML), Countering the Financing of Terrorism (CFT) and sanctions screening checks that are not only expensive but useless. T...
Jun 28, 2022•44 min•Season 1Ep. 108
Future of Finance interview with Lisa Fall, CEO at BSTX and Jay Fraser, Head of Strategy at BSTX. BSTX is the first exchange based on blockchain to be fully regulated by the Securities and Exchange Commission (SEC) and licensed to operate on a national scale. It took the founders of the Boston-based exchange years to get there but they were clear from the outset that fully regulated status is the key to success. It certainly makes it easier to engage regulated brokers and market-makers as well a...
Jun 15, 2022•36 min•Season 1Ep. 107
Artificial intelligence (AI) and machine learning (ML) are technologies subject to errors of pessimism as well as errors of optimism. Predictions of their eventual impact range from dystopias in which machines reduce human beings to helots, through mass, machine-led unemployment, to Utopias of universal leisure in which all the work is done by machines. In the financial services industry, meanwhile, practical applications of AI and ML are yielding substantial returns in the detection of errors a...
Jun 01, 2022•1 hr 5 min•Season 1Ep. 106
“We have yet to hear a convincing case for why the UK needs a retail Central Bank Digital Currency (CBDC),” concluded a report of January 2022 from the Economic Affairs Committee of the House of Lords. “While a CBDC may provide some advantages, it could present significant challenges for financial stability and the protection of privacy.” The Committee included a former Governor of the Bank of England and a distinguished economic historian (of the “What would Keynes do?” school). Despite such sc...
May 19, 2022•1 hr 16 min•Season 1Ep. 105
For more information click HERE It is easy to portray the tokenisation of securities as a mortal threat to central securities depositories (CSDs). In principle, security tokens issued on to blockchain networks can dispense with all the core functions of a CSD in safeguarding the integrity of issues, maintaining a register of investors, settling transactions in central bank money, distributing entitlements and maintaining accounts for custodian banks acting on behalf of investors. That is why mos...
May 17, 2022•1 hr 54 min•Season 1Ep. 104
Bond markets were a primary target of blockchain technologists. As early as 2017-18 bonds were being issued and auctioned on blockchains by banks and benchmark issuers, and proofs of concept continued throughout the blockchain winter that took hold in 2019. In the Spring of 2021, the European Investment Bank issued a tokenised bond on to a public blockchain without the intermediation of a central securities depository (CSD) or a custodian bank. For a time it looked as if that one deal might fina...
Apr 21, 2022•1 hr 41 min•Season 1Ep. 103
Growing institutional interest in the largest and most liquid crypto-currencies is now spilling over into staking via Decentralised Finance (DeFi) protocols and into Non Fungible Tokens (NFTs). While widening institutional interest in digital assets is partly explicable as a search for an income-producing outlet for crypto-currency holdings, it also attests to a growing institutional confidence that blockchain-based networks will one disrupt the established order in the money and capital markets...
Mar 29, 2022•56 min•Season 1Ep. 102
The Metaverse is notoriously hard to define. Those definitions which do exist describe a digital facsimile of the physical world, which people enter as avatars by donning headsets and hand sensors. Once inside, they walk around, talk to people, attend meetings and events, visit buildings and buy and sell goods and services, just as they do in the physical world. For businesses, it is the last of these activities that matters. For them, the Metaverse is a new way to find customers and sell them t...
Mar 28, 2022•1 hr 7 min•Season 1Ep. 101
A market in which the assets coveted by investors for use as profile pictures or digital avatars are branded as Crypto-Punks, members of the Bored Ape Yacht or Kennel Club, or as Pudgy Penguins, is redolent of the Pokemon card craze of the 1990s. As it happens, the popularity of these Non-Fungible Token (NFT) collections with gameified nomenclatures has sparked a rediscovery of Pokemon cards, which are enjoying a nostalgia boom. That incidental side-impact is not a surprising one, because the sc...
Mar 28, 2022•1 hr 3 min•Season 1Ep. 100
A Future of Finance interview with David Nicol, CEO and Co-founder of LedgerEdge. The US$124 billion global bond markets seem at last to be taking pole position in the race to unlock the efficiencies conferred by blockchain technology. Much of the effort is directed at the primary markets, where the telephone plays the part it has since the 1960s and the fax and spreadsheet continue in the roles they stole from the telex and the pocket calculator in the 1980s. But the real prize in fixed income ...
Mar 21, 2022•45 min•Season 1Ep. 99
Central Bank Digital Currencies (CBDCs) can seem like nuclear fusion: a proven technology delayed by engineering problems. It is an analogy that Simon Chantry will enjoy since he began his career as a nuclear engineer before co-founding the blockchain-based digital currency technology provider Bitt in 2013. As CIO at Bitt, he has implemented the Bitt Digital Currency Management System (DCMS) on behalf of the Eastern Caribbean Central Bank (ECCB) and the Central Bank of Nigeria, putting the compa...
Mar 03, 2022•54 min•Season 1Ep. 97
It is not hard to see why centralised financial market infrastructures are more alive than other financial institutions to the opportunities and threats of distributed ledger technologies. They are the neutral entrepots through which data flows between participants in every financial market so, if every market participant can access the same data simultaneously, the occupation of any provider intermediating point-to-point data flows comes into question. In this environment, the wise market infra...
Mar 03, 2022•1 hr•Season 1Ep. 98
Fine art is often cited as a natural candidate for tokenisation. It is illiquid and traded amongst a small class of wealthy investors at prices which are not always transparent. Fine art also has a long history of generating positive returns, if not the sky-high performance often touted, chiefly through capital gains. However, the entry barriers tend to be high. Minimum investments can be large, and the management and transaction costs extortionate. Art also has to be kept safely and maintained ...
Mar 01, 2022•31 min•Season 1Ep. 97
One of the signal achievements of blockchain technology is to highlight the inefficiencies of financial market silos in which the free flow of assets and transactions is obstructed by fragmented data sets that must be reconciled laboriously and repeatedly. A vision of the future, in which data and the technology which processes it are distributed and market participants are decentralised, is slowly becoming a day-to-day reality across cash, equity, debt, collateral, foreign exchange (FX) and fun...
Feb 27, 2022•51 min•Season 1Ep. 96
The costs of financial crime are staggeringly high. The financial crime compliance officers that responded to a LexisNexis Risk Solutions survey of financial institutions in 26 markets around the world said they spent US$213.9 billion on compliance with financial crime regulations in 2020. If the main finding of a Refinitiv survey of 19 markets in 2018 still holds, and firms are spending 3.1 per cent of annual turnover on Know Your Client (KYC), Anti Money Laundering (AML), Countering the Financ...
Feb 24, 2022•1 hr 1 min
Traditional stock exchanges are confronted by a classic Innovator’s Dilemma. They have the installed client base and the revenues to match. But if their digital challengers lack clients, they also benefit from nugatory costs and a new technology powerful enough to extend their reach into whole new classes of investors, issuers and assets. Faced by a potentially long transition to a totally new model in the capital markets, established exchanges know they must work out how and when to embrace cha...
Feb 17, 2022•47 min•Season 1Ep. 95
In November 2021, the SIX Group issued a CHF 150 million bond onto its own exchange and into its own central securities depository (CSD). Nothing remarkable about that, you might think. Except that the securities became the first digital bond to be freely issued into a regulated environment. More remarkable still is that a majority of investors, offered a choice of the bonds in tokenised or traditional form, opted for the tokenised variety. Creating that choice required considerable operational ...
Feb 16, 2022•43 min•Season 1Ep. 94
Fusang is Asia’s first fully licensed and regulated digital financial ecosystem for security tokens and assets. Licensed in two jurisdictions (Hong Kong and Labuan, Malaysia), Fusang operates a fully licensed and regulated digital ecosystem which includes Fusang Exchange, a regulated stock exchange for security tokens. Fusang’s driving force is its vision of making it as easy to invest into a company as it is to buy its products online. Most tokenisation ventures start with technology, their spo...
Feb 15, 2022•1 hr 14 min•Season 1Ep. 93
Post-trade was an early target of the blockchain revolution. Yet progress has proved to be arduous, with legacy technologies, regulatory uncertainty and the protectionism of incumbents making it hard for even successful proofs of concept and pilots to grow into scalable innovations. Signs are now more encouraging, with blockchain-based investments poised to disrupt the securities and money markets from the front office to the back over the next few years. The Corda technology created by R3, whic...
Feb 15, 2022•54 min•Season 1Ep. 92
The ingredients of a successful security token exchange are now clear. It must be regulated, focused on asset classes that will benefit from greater liquidity and secondary market trading, and be backed by strong, committed and widely recognised shareholders that are willing to engage actively in helping the exchange to succeed. ADDX, the security token exchange regulated by the Monetary Authority of Singapore (MAS), meets these criteria in full. Armed from 2020 with no less than three regulator...
Feb 14, 2022•1 hr 3 min•Season 1Ep. 91
Central securities depositories (CSDs) have always led an unglamorous existence. They are overshadowed by trading and investment activities, even when the post-trade revenues they generate are more reliable or more profitable or even just larger. The rise of the digital asset has not improved their lot. They are threatened with disintermediation by securities tokens issued, traded and safekept on blockchain networks that promise to replace the issuance and registration and settlement services of...
Feb 14, 2022•1 hr 1 min•Season 1Ep. 90
This year marks the twentieth anniversary of the PayPal IPO. At the time, the failure of the conventional payments industry to respond to the epic potential of e-commerce on the Internet surprised even the more thoughtful bankers. Two decades later, that institutional inertia looks negligent rather than surprising. The loss of payments revenues by banks to technology companies represents a loss of shareholder value that far exceeds what the owners of banks lost in the financial crisis of 2007-08...
Feb 10, 2022•1 hr 4 min•Season 1Ep. 89
A protocol which combines high speed and scalability with the highest standards of security and privacy is what is required to make blockchain both mainstream and universal. The designers of the Meta MUI Blockchain set out to meet these demanding requirements. Inspired by the vision of a high-volume transaction network that is seamless across the Internet and mobile telephone networks, and in which security and privacy are protected by tying digital assets to digital identities, their goal was t...
Feb 01, 2022•58 min•Season 1Ep. 87
Enthusiasts for security tokenisation must sometimes feel like Old Testament prophets waiting for the new dispensation to begin. Yet the fact that they are waiting at all is a mystery. Theory and practice (albeit modest, so far) both suggest that issuers ought to be queuing up to issue security tokens. Tokenisation would cut their cost of raising capital significantly, by widening the investor base, cutting issuance fees and trimming listing and investor servicing charges. Yet even the most opti...
Jan 20, 2022•1 hr 24 min•Season 1Ep. 86
The convergence of traditional and blockchain-based financial markets is now a given. But it still takes people and businesses to make it happen. The proportion of FinTechs seeking regulatory licences is one measure of who is doing what. Now a regulated Swiss security token start-up, STOverse, has hit upon an idea that the Peter Thiel of Zero to One would recognise instantly as an unsuspected secret hidden in plain sight: DeFi can be a source of capital and liquidity for securities tokens. In te...
Jan 13, 2022•1 hr 8 min•Season 1Ep. 85
Wealth management faces much the same challenge as other forms of asset management: the fact that costs are rising faster than revenue. The consequent squeeze on profitability is encouraging many wealth managers to explore how technology can help restore a more comfortable expense ratio. But it is in the nature of wealth management to place service on at least an equal footing to efficiency. Which is why Wealth Wizards, a 12-year-old FCA-regulated technology provider to the industry, emphasises ...
Jan 06, 2022•53 min•Season 1Ep. 84
Blockchain has so far failed to overcome its notorious trilemma: the need for trade-offs between speed, scalability and decentralisation. Until it does, blockchain technology will struggle to fulfil its potential by penetrating the traditional securities and derivatives markets and remain trapped in the mere transmission of value in crypto-currency markets rather than displacing the entire structure of the global financial markets. Enterprise blockchains, the long awaited Ethereum 2.0 and variat...
Jan 05, 2022•1 hr•Season 1Ep. 83
There are offshore financial centres and there are onshore financial centres. And there is the Labuan International Business and Financial Centre (IBFC) in eastern Malaysia, which styles itself as a “midshore” financial centre. The neologism is well-chosen, for the IBFC enjoys a special status within Malaysia. It has its own regulator, its own legal system, its own exchange, and it is not subject to the exchange controls that govern capital flows into and out of the mother country. Since its fou...
Dec 29, 2021•58 min•Season 1Ep. 82
In a modern economy, the most important costs are transaction costs. And the cost of compliance is fast becoming a major tax on financial businesses. Deloitte has put the cost of regulatory reporting in the banking industry alone at 10 per cent of operating costs, or €230 billion a year. LexisNexis has estimated the cost of running KYC, AML, CFT and sanctions screening checks at US$115 billion a year across North America and just five countries in western Europe. What drives these costs is the s...
Dec 22, 2021•1 hr 10 min•Season 1Ep. 81
