The global financial industry continues to study the block chain with increasing vigor. The SWIFT Institute, a La Hulpe, Belgium-based financial research organization, is seeking proposals for a pair of research grants on block chain capabilities.
Each 15,000 EUR grant is for block chain research, one in securities and the other in intraday liquidity. Proposals must be submitted by Aug. 7. In each case, the institute will pay half of the 15,000 euros immediately and the balance on acceptance of a working paper.
The institute will publish each working paper to the global financial industry while the authors will be free to submit the papers to publications.
The SWIFT Institute seeks to improve the understanding of current practice and future needs in global financial services, with a focus on transaction banking.
Grant applicants can access guidelines for each proposal on the institute’s website.
First Grant: Block Chain On Transaction Life Cycle
The first research grant is for a proposal on “The Impact and Potential of Blockchain on the Securities Transaction Lifecycle.” This research addresses the financial industry’s growing interest in what the securities transaction life cycle would look like on the block chain compared to the current environment. The proposal should address if the securities transaction life cycle would be better, worse or simply different on the block chain.
SWIFT notes that several financial institutions have announced plans to explore or use the block chain in the securities markets. UBS Bank has been working on smart bonds on the block chain, the theory being that it could allow for instantaneous settlement, thereby lowering costs and operational risk. The Nasdaq OMX Group has been testing with block chain as a record-keeping ledger for the Nasdaq Private Market. The New York Stock Exchange has purchased a stake in a bitcoin wallet to be prepared if stock exchanges move to a distributed model.
Block chain proponents claim a distributed ledger transactions can be irrevocable, with clearing and settlement nearly instantaneous.
Critics say speed and transaction capacity over the block chain is not sufficient for the securities
The research can be theoretical or empirical and should focus on distributed ledger and block chain technology for use in the securities transaction life cycle.
Grant Two: Intraday Liquidity Management
The second research grant is for a proposal on “Intraday Liquidity Management and Reporting: The Business Case.” The financial crisis highlighted key weaknesses in banks’ liquidity risk management, SWIFT notes. This concern has caused global regulators to focus more on liquidity risk such as banks’ ability to manage intraday risk. The proposal should identify the effective financial business case of real-time liquidity management.
Regulators could require banks to provide evidence of real-time management of their liquidity. Beyond the potential costs of non-compliance with the required reporting in the impacted jurisdictions, the proposal should examine the effective financial business case of managing liquidity in near real-time.
The proposal should focus on the concept of a business case for real-time liquidity management.
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