Saturday, December 7, 2019

HSBC’s plan to move USD 20 billion in assets to blockchain

  December 07, 2019    Nikhil Verma

Investment bank HSBC is using a blockchain distributed ledger technology (DLT) to digitize transaction records of private investments, enabling clients globally to access the details of their assets online in near real-time. It plans to move USD 20 billion in assets that include equity, debt and real estate onto its new Digital Vault blockchain, a shift away from its current use of paper records to respond to client search requests.

Presumably, millions of potential investors and users will be on-ramped to blockchain interfaces and they likely won't even be aware of the backend technology

Digital Vault, developed by HSBC's Securities Services unit (HSS), is expected to eventually handle the custody of additional digital asset classes, enabling the bank to move more of the asset transaction lifecycle onto the ledger in the future. The bank has been involved with enterprise DLT firm R3 since at least 2015.

Stephen Bayly, HSBC's CIO for Securities Services, said the bank is responding to clients who have been requesting real-time visibility into their private transactions so they know when they will receive the coupon on a private debt transaction or to facilitate a records audit. Private assets are prime candidates for digitization and we see this platform as a key step on the journey as the model evolves. In future full transaction lifecycle could be stored on a ledger, including issuing digital tokens instead of paper certificates.

This could be a watershed moment for main-streaming of blockchain in securities management.

Robots in Finance Could Wipe Out Some of Its Highest-Paying Jobs

  December 07, 2019    Nikhil Verma

Famed quantitative financial mathematician Marcos Lopez de Prado testified on Dec 06, 2019 before the U.S. Congress, together with four other panelists. The topic was "Robots on Wall Street: The Impact of AI on Capital Markets and Jobs in the Financial Services Industry".

Dr. Lopez de Prado is the Professor of Practice, Engineering School, Cornell University and Chief Investment Officer, True Positive Technologies. As per him the machine learning creates a number of challenges for the 6.14 million people employed in the US in the finance and insurance industry, many of whom will lose their jobs, not necessarily because they are replaced by machines, but because they are not trained to work alongside algorithms. The retraining of these workers is an urgent and difficult task.

Nasdaq runs more than 40 different algorithms, using about 35,000 parameters, to look for market abuse and manipulation in real time. According to another panalist, Martina Rejsjo, head of Nasdaq Surveillance North America Equities, Nasdaq Inc., the massive and, in many cases, exponential growth in market data is a significant challenge for surveillance professionals. Market abuse attempts have become more sophisticated, putting more pressure on surveillance teams to find the proverbial needle in the data haystack.

According to CFA Institute's senior director Rebecca Fender, 43% of CFA members and candidates expect their roles to change significantly in the next five to 10 years, according to a survey of more than 3,800 respondents. The three roles most likely to disappear are sales agents, traders and performance analysts.

While Charlton McIlwain, professor of media, culture and communication at New York University said that racial groups that are already extremely underrepresented in the financial services industry will be most at risk in terms of automation and the escalation of fintech development. This is especially true given the vast underrepresentation of African-Americans and Latinx in the adjacent technology sector workforce.
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