03.17.2016

ICAP Preps First Smart Contracts

03.17.2016

Smart contracts are one step closer to reality as ICAP plans to rollout its first smart foreign-exchange contracts later this year.

“Our clients already get the data today from the ether and then into a GUI,” said Jenny Knott, CEO of Post-Trade Risk and Information division at ICAP. “Instead, we are going to give it to them as data on the server and then we are going to start adding more and more services into the smart contract.”

“We will deliver the smart contracts in parallel and demonstrate to clients that by using the new blockchain technology and a distributed ledger that they will see the same, if not better results,” added David Thompson, COO at Traiana.

Jenny Knott, ICAP

Jenny Knott, ICAP

ICAP will work with its partner banks to prioritize further instrument support and new smart-contract capabilities, according to Knott. However, swaps and cleared swaps likely will be next supported instruments after FX, she noted.

The inter-dealer broker decided to offer smart contracts to clients after a successful completion of a six-week proof-of-technology earlier this year.

ICAP worked with distributed-ledger vendor Axoni, in which the inter-dealer broker has invested via its early-stage funding program Euclid Opportunities. to set up a peer-to-peer distributed-ledger testbed that supported smart contracts.

Beside including all the standard post-trade data, the inter-dealer broker also included allocation and rollover functionality into the testbed smart contracts as well.

ICAP spent from mid-January to the end of February examining the testbed’s capabilities before spending another week stress testing the setup to simulate peak trading days and making sure that the testbed could report, match, confirm, an identify failed trades as well as the firm’s post-trade workflow.

“The goal of the PoT was to do what we do today with a new technology so that we can do more with that technology,” said Knott. “We are proving that the new technology will do what we are doing today with other systems and do it quicker, cheaper and faster as well as being able to do a lot more enriching the smart contract with infinite services and reference data.”

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