Stock Market – Colombian stock market plans blockchain for OTC derivatives margins – Ledger Insights

Final week the Colombian stock market, Bolsa de Valores de Colombia (bvc), introduced it’s becoming a member of the Colibrí blockchain consortium and collaborating with fintech Contrato Marco. The latter is a expertise specialist in managing collateral for OTC derivatives margin necessities.

OTC derivatives are the biggest capital markets on the earth. Whereas stock markets are worth $90 trillion globally, the derivatives market is valued at greater than $625 trillion, with about 86% of that traded off exchanges or over-the-counter (OTC).

Following the 2008 disaster, the Basel Committee and IOSCO introduced in new margin guidelines for OTC derivatives, which began to section in 2016, first making use of to bigger entities. At present, organizations with month-end balances of greater than €750 billion must comply. Subsequent 12 months entities with balances above €50 billion fall into the foundations.

In the mean time, in Colombia the OTC margin course of is comparatively handbook. Utilizing distributed ledger expertise (DLT) and therefore sharing data can cut back the time to regulate collateral, thereby decreasing threat for each events.

“The agreement reached with bvc will allow us to show the market that in technology blockchain is the future of financial infrastructures, because it allows the creation of products and simpler, faster and more efficient processes for customers,” stated Juan Manuel López, govt director of Contrato Marco.

Members of the Colibrí consortium embrace Porvenir, Skandia, Protección, Bancolombia, Banco BBVA, Fiduciaria Bancolombia, Santander CACEIS Colombia, Deceval, precia, Sophos Options, Gómez Pinzón Abogados, 2TransFair, and Contrato Marco.

Not talked about within the announcement, the business requirements physique, ISDA, has created a standard area model (CDM), which gives a normal for OTC derivatives workflows globally. Whereas its utility will not be restricted to blockchain, that has been the expertise mostly used.

Examples of blockchain derivatives options embrace Axoni’s DLT fairness swap platform that’s utilized by Goldman Sachs and Citi. Lately UBS and ASX piloted a derivatives settlement answer with ISDA.