Application Of Blockchain In Equity Post Trade Training Ppt

Slide 1

This slide gives an introduction to post-trade processing, which takes place after a deal is completed. At this stage, the buyer and seller examine trade facts, ratify the agreement, modify ownership records, and arrange for the transfer of securities and cash. 

Slide 2

This slide lists the present process of equity post-trade. Starting from an investor using interfaces offered by his/her preferred bank to placing equities trade orders on the exchange to a third party interacting directly with the CSD during servicing stages to serve an an assurance of trust for custodian banks and investors.

Instructor Notes: 

CSD: Central Securities Depository 

CCP: Central Clearing Counterparty

Slide 3

This slide illustrates present problems associated with equity post-trade.

Instructor Notes:
 

• Time difference between transaction execution and settlement: Even though investors may view traded assets in their accounts quickly after obtaining confirmation, settlement takes place only after t+3 days , limiting activities that investors can perform in the meantime
• Data inconsistency: As counterparty bank data changes often, CSDs must manually authenticate many transactions prior to settlement
• Counterparty danger: Custodians must plan for the potential risk that a counterparty will be unable to settle the transaction when the time comes
• Operational danger: CCPs must plan for the risk that technological or human faults will result in incorrect settlement
• Settlement ambiguity: Investors are not always alerted when their trades settle, depending on custodial protocols
• Account complexity in safekeeping: Custodians have limited flexibility in storing assets since securities settlement systems connect safeguarding accounts across custodian banks at the CSD
• Costly intermediaries: To begin asset servicing, corporations must enlist the help of third parties and intermediaries

Slide 4

This slide illustrates how blockchain technology can overcome the current equity post-trade process — starting from investors utilizing interfaces supplied by their preferred banks. The technology offers solutions to issues that arise in all stages.

Slide 5

This slide covers the benefits that application of blockchain technology brings to Equity post-trade.

Instructor Notes: 

• Reduced settlement time: The settlement could be decreased to real-time settlement, trade date plus one day, or trade date plus two days through downstream, post-transaction automation, and improved efficiency 
• Data needs are standardized: Standardizing data fields for trade matching increases the efficiency of the current clearing process
• Decreased Counterparty risk: Risk of any counterparty not settling is reduced due to automatic validation 
• Lower operational risk: Using a smart contract to transfer equity and cash reduces the possibility of technological snags or manual mistakes
• Confirmation in real-time: By keeping trade confirmations on Distributed Ledger Technology (DLT), investors can receive settlement notifications without depending on a custodian
• Lower account complexity: Since connectivity with securities settlement systems is no longer essential, custodians will handle assets with greater freedom
• Disintermediation of services: Smart contracts reduce the need for third-party mediators in activities related to servicing