trading derivatives

Yesterday Axoni announced the addition of BlackRock as a user of Veris, the blockchain solution for equity swaps. Veris was launched in early 2020 with 15 sell-side and buy-side firms, including Citi and Goldman Sachs, which are also Axoni investors.

The solution enables all parties to confirm derivative trade terms at the outset and keep any changes and life cycle events synchronized, such as amendments, positions and cashflows.

“The Axoni platform will help us build scalability while mitigating risks in the investment life cycle beginning with equity swaps,” Mark Cox, COO of Global Investment Operations at BlackRock. “We see great potential in a distributed ledger network for uncleared derivatives as we continue to prove out this new area of innovation.”

Two key benefits include removing the need for reconciliation because of shared data and using standards. This reduces cost and risks because parties to a trade know their data is synchronized. 

Back in 2018, the derivatives industry body, ISDA published a new standard, the common domain model (CDM), and there have been iterations since. This involves standardizing both data and derivatives processes and is the foundation for enabling the efficiencies provided by a system like Veris.

“Sell-side participants will benefit immensely from using a shared platform with one of the industry’s most important swap counterparties,” said Carl Forsberg, Head of OTC Markets at Axoni. “BlackRock will bring significant efficiencies to the network by driving adoption of standardized post-trade swap data models and workflows.”

Multiple derivatives projects

Axoni runs on its enterprise version of the Ethereum blockchain. Veris isn’t its only derivatives solution. Its technology is being used for the DTCC’s updated credit derivatives Trade Information Warehouse (TIW) platform, which may launch in 2022. It is also working with OCC, the world’s largest equity derivatives clearing platform, to replace the OCC’s securities lending infrastructure.

As a result of increased standardization and the scale of the derivatives markets, there are other derivatives projects. One example is German banks Bayern LB and DZ Bank involved in an OTC interest rate derivatives solution with the Deutsche Börse. And in Singapore, BNP Paribas Securities Services is involved in a blockchain solution for exchange traded derivatives.

Axoni’s founders were also involved in TradeBlock, a cryptocurrency analytics and pricing firm sold to CoinDesk in January. In February, Axoni closed a $31 million investment round, bringing the total equity raised to $90 million. Investors include Deutsche Bank, Intel Capital, UBS, UBS, Citi, Goldman Sachs, HSBC, J.P. Morgan, Nyca Partners, and Wells Fargo.


(Excerpt) Read more Here | 2021-09-08 02:23:28
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