Washington DC-based Chamber of Digital Commerce and the Structured Finance Industry Group (SFIG) have partnered with a view to advancing the use of blockchain technology in securitisation markets.
The partnership will commence with the publication of a co-sponsored white paper titled, "Applying Blockchain in Securitization: Opportunities for Reinvention", and a series of educational activities at SFIG Vegas 2017, the largest gathering of the structured finance industry, which begins today in Las Vegas, Nevada.
The goal of the partnership is to bring the structured finance and blockchain communities together. The two organisations will collaborate on research efforts and publications, joint educational programmes and online forums, said a statement. In addition to a detailed examination of how blockchain can play a role at each stage of the securitisation 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 securitisation 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 securitisation 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 securitisation 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 white paper is just the beginning of what we expect to be a very active and productive partnership."
"The securitisation 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."