Testing blockchain technology with credit default swaps. A look at how the test worked, what it revealed and what’s next?
Everyone is talking about blockchain technology these days but for many, the applicability of this new technology to financial services, and in particular post-trade processing, is not really well understood. Recently Markit along with seven firms successfully tested blockchain technology and smart contracts to manage the post-trade lifecycle events for standard North American single name credit default swaps (CDS). This test demonstrated that complex events inherent to CDS, including payments, amendments, novations and compressions, can be efficiently managed on blockchain – in a permissioned, distributed, peer-to-peer network.
In this DerivSource podcast I spoke with Jeff Billingham, Vice president, Markit about this test and really to learn more about how it worked and what the implications are for the OTC derivatives industry at large. We discuss what deemed this test successful, what benefits use of blockchain technology may deliver to the OTC derivatives post-trade processing space and what the next steps are.
Listen in or read the podcast transcript via the PDF below.
