The Chamber of Digital Commerce, the world’s largest trade association representing the Blockchain industry, and the Structured Finance Industry Group (SFIG) has announced the formation of a strategic partnership focused on advancing the use of Blockchain technology in securitization markets.
The partnership has already published a co-sponsored white paper titled, “Applying Blockchain in Securitization: Opportunities for Reinvention.” The partners also planned to conduct a series of educational activities at SFIG Vegas 2017, the largest gathering of the structured finance industry, which began on February 26 in Las Vegas.
The goal of the partnership is to bring the structured finance and Blockchain communities together. The two organizations will collaborate on research efforts and publications, joint educational programs and online forums.
In addition to a detailed examination of how Blockchain can play a role at each stage of the securitization lifecycle, the white paper, prepared by Deloitte, outlines five distinct benefits for Blockchain in structured products:
- Single, Consistent source of information – Blockchain enables a single, consistent source of information for all participants in the network.
- Complete, immutable audit trail – From loan origination to primary issuance, servicing, and changes in ownership in the secondary market, Blockchain can create a chronological and immutable audit trail of all transactions.
- Better valuation and price discovery – The transparency facilitated by Blockchain technology could reduce the information asymmetry and network disadvantages that some entities, especially smaller ones, currently face in the securitization industry.
- Speed and certainty – Blockchain technology, through its disintermediation and simultaneous recording of information across the system, can virtually eliminate time lags in information and payment flows throughout the securitization process, including in the secondary market.
- Security – Blockchain’s capacity to increase the security of transactions and data, and mitigate fraud could be appealing to the securitization industry, where integrity of data is paramount.
“I am pleased to announce this strategic initiative with the Chamber of Digital Commerce, which has established an important position in representing the growing Blockchain industry,” said Richard Johns, SFIG Executive Director. “Partnering with the Chamber is a key part of our focus on being a central resource of forward looking education to all market participants. With this partnership we can create new, forward-thinking and educational opportunities for our members enabling them to stay fully informed of how technology is impacting their business. Today’s whitepaper is just the beginning of what we expect to be a very active and productive partnership.”
“The securitization process is an ideal candidate for the efficiencies of distributed ledger technology,” said Perianne Boring, founder and president, Chamber of Digital Commerce. “Blockchain platforms create a more transparent and secure marketplace allowing the industry to provide better products more securely at lower cost. This will also enable the market to more efficiently comply with regulations, while at the same time allowing automation to create significant efficiencies for the role of the regulator itself. Our partnership with SFIG is an opportunity to accelerate the understanding and adoption of Blockchain technology in this sector.”
Looking forward, the Chamber of Digital Commerce is already set to attend the DC Blockchain Summit in Washington, D.C., on March 15-17. Although it may not be surprising to Blockchain developers that the Blockchain could benefit the securities market, small- to mid-sized organizations that deal in securities will be pleased to note that the Blockchain will make it possible for them to react in real-time to a rapidly changing market by providing information that is secure, transparent and consistent with what bigger players in the securities market are already seeing. The white paper, which focuses on the ways that the Blockchain can benefit financial securities, can be found here.
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