Barclays, Credit Suisse, KBC, SIX, Thomson Reuters and UBS collaborate to advance MiFID II data reconciliation project using Ethereum smart contracts.
Running on a permissioned blockchain on the Microsoft Azure cloud platform, the project aims to improve the way in which participants can baseline their Legal Entity Identifier (LEI) reference data against the industry consensus.
Zurich / Basel , 11 December 2017 – Barclays, Credit Suisse, KBC, SIX, Thomson Reuters and UBS are advancing an initiative to improve the quality of counterparty reference data through anonymous reconciliation with industry counterparts, using Ethereum smart contracts.
The project was initiated by UBS in the innovation lab at Level39 in London and was borne out of the need to improve data quality as part of the impending implementation of the MiFID II/MiFIR regulation on January 3, 2018, which is a new legislative framework that aims to strengthen investor protection and improve the functioning of financial markets making them more efficient, resilient and transparent.
Within the regulation framework is the expectation for each institution to have an individual Legal Entity Identifier (LEI). The reconciliation of the reference data which pertains to the LEI for each entity - such as industry classification, identifiers and European Securities and Markets Authority (ESMA) data - is the project's focus, with the aim of streamlining the process for all participants.
"Traditionally, a firm such as ours quality checks data against multiple sources but we do not have a quality baseline against peers”, said Christophe Tummers, Head of Data at UBS. "Through using blockchain-inspired smart contracts, the reconciliation of data can happen in almost real-time for all participants, anonymously."
The specific reference data for each Legal Entity is cryptographically concealed at each institution using a process called hashing. The source data is held and remains within the participating institution. Only the hashed data is submitted, anonymously, to an Ethereum private blockchain powered by Microsoft Azure. The Ethereum smart contracts then reconcile the data against the consensus and provide each participant, via a user interface, the ability to search and view their own specific data in real-time. A user can then quickly see where the anomalies lie in the data set and work to resolve those.
“Applying blockchain to the challenges of regulatory data management presents an additional exciting opportunity for SIX to focus its data quality efforts and expertise in regulatory services in a customer oriented way,” said Robert Jeanbart, Division CEO SIX Financial Information.
“MiFID II creates complex data management challenges for businesses, and this initiative presents a unique opportunity for firms to benchmark content alongside their peers before it is used in regulatory reporting,” said Mark Davies, Global Head of RMS Data Services at Thomson Reuters. “This is an exciting and collaborative project that uses the latest blockchain technology to solve a real-world business challenge by improving the quality of counterparty reference data.”
The current phase of the project is a pilot in a mock-live environment using 22,000 non-sensitive LEI reference attributes for cash equity issuers. The pilot is to complete by the end of January 2018, with further, staged rollout dependent on the findings.
“This is an important project as it establishes blockchain benefits in a broader context than clearing and settlement. The use of blockchain to solve real-world regulatory requirements in a cost effective way is very appealing”, said Emmanuel Aidoo, Head of Blockchain Strategy at Credit Suisse.
"We hope that in future, with the help of further automation, this project can move beyond simply anomaly detection to that of resolution." added Tummers.
Barclays is a transatlantic consumer and wholesale bank with global reach, offering products and services across personal, corporate and investment banking, credit cards and wealth management, with a strong presence in our two home markets of the UK and the US. With over 325 years of history and expertise in banking, Barclays operates in over 40 countries and employs approximately 85,000 people. Barclays moves, lends, invests and protects money for customers and clients worldwide.
Media contact: Archana Achuthan, + 44-203-555-7623, email@example.com
About Credit Suisse AG
Credit Suisse AG is one of the world's leading financial services providers and is part of the Credit Suisse group of companies (referred to here as 'Credit Suisse'). As an integrated bank, Credit Suisse offers clients its combined expertise in the areas of private banking, investment banking and asset management. Credit Suisse provides advisory services, comprehensive solutions and innovative products to companies, institutional clients and high-net-worth private clients globally, as well as to retail clients in Switzerland. Credit Suisse is headquartered in Zurich and operates in over 50 countries worldwide. The group employs approximately 46,720 people. The registered shares (CSGN) of Credit Suisse's parent company, Credit Suisse Group AG, are listed in Switzerland and, in the form of American Depositary Shares (CS), in New York. Further information about Credit Suisse can be found at www.credit-suisse.com.
Media contact: Azar Boehm, +1-212-538-3953, firstname.lastname@example.org
KBC Group is an integrated banking/insurance group primarily serving retail, private banking, SME and midcap clients. Our culture is the fertile and energizing soil on which we build our strategy, consisting of 4 cornerstones, interacting with each other: We strive to offer our clients an unique bank-insurance experience. We develop our group with a long term perspective and therefore achieve sustainable and profitable growth. We put our clients’ interests at the heart of what we do and strive to offer them at all times a high quality service and relevant solutions. We take our responsibility towards society and local economies very seriously and aim to reflect that in our everyday activities. Doing so we will become the reference in our core markets. We concentrate our activities to our strategic markets which include, Belgium, Czech Republic, Slovakia, Hungary, Bulgaria and Ireland. We are also active in several other countries for the purpose of supporting our business clients from our strategic markets. In Belgium, KBC Group operates under the names KBC, CBC and KBC Brussels. KBC Group is listed on Euronext Brussels.
Media contact: Ilse De Muyer, +32-2429-29-15, email@example.com
SIX operates the infrastructure underpinning the Swiss financial sector and offers a comprehensive range of services around the world in the fields of securities trading and settlement, financial information and payment transactions. The company is owned by its users (approximately 130 banks of various orientation and size). Its workforce of over 4,000 employees and presence in 25 countries throughout the world generated operating income of CHF 1.8 billion and a Group net profit of CHF 221.1 million in 2016. www.six-group.com
Media contact: Julian Chan, +41-58-399-2508, firstname.lastname@example.org
About Thomson Reuters
Thomson Reuters is the world’s leading source of news and information for professional markets. Our customers rely on us to deliver the intelligence, technology and expertise they need to find trusted answers. The business has operated in more than 100 countries for more than 100 years. Thomson Reuters shares are listed on the Toronto and New York Stock Exchanges. For more information, visit www.thomsonreuters.com
Media contact: Felice Tobin, + 44-207-542-7894, email@example.com
UBS provides financial advice and solutions to wealthy, institutional and corporate clients worldwide, as well as private clients in Switzerland. The operational structure of the Group is comprised of our Corporate Center and five business divisions: Wealth Management, Wealth Management Americas, Personal & Corporate Banking, Asset Management and the Investment Bank. UBS's strategy builds on the strengths of all of its businesses and focuses its efforts on areas in which it excels, while seeking to capitalize on the compelling growth prospects in the businesses and regions in which it operates, in order to generate attractive and sustainable returns for its shareholders. All of its businesses are capital-efficient and benefit from a strong competitive position in their targeted markets.