The securities custody industry

Custody is, in essence, a service consisting in holding (and normally administering) securities on behalf of third parties. In step with the growth of sophisticated financial markets, custody has evolved into a complex industry no longer characterised by physical safekeeping but by a range of information and banking services. Given the multi-tier structure of the industry, custody services are provided by a variety of intermediaries. This paper describes the development of the custody industry and the structure of the custody services market. It also discusses the risks involved in custody and the challenges the industry is facing, particularly in the European context. JEL Classification: G15, G21, L22.Custody industry, securities settlement, systemic risk, custodian banks, global custodians.

An Analysis of Decentralized Finance and its Applications

Cryptocurrency and blockchain technology are relatively recent economic and technological trends. Within the cryptocurrency sphere a new form of decentralized peer-to-peer finance network has emerged. This is of course Decentralized Finance (DeFi). DeFi is a relatively quick and permissionless financial movement within the greater world of cryptocurrency and blockchain technology. DeFi is built on ideas of easy access, interoperability, transparency, and limited third-party meddling. As such, DeFi and its principles are in clear contrast to traditional financial institutions that value centralized control. The aim of the thesis is to further investigate the technological and financial properties of DeFi and disclose how these relate to the broader aspects of the financial world. The thesis answers key research questions of interest by performing a deep dive into the DeFi sphere. In this thesis the underlying protocols of DeFi is analyzed. This is supplemented by examining and comparing DeFi to traditional financial foundations and values. A comprehensive literature review is explored and summarized to point out the uniqueness of DeFi, in addition to advantages and disadvantages and finally what yet needs to be improved within the sphere. Based on the analysis in this thesis, several findings were made regarding the nature of the decentralized market today. Finally, concluding remarks are provided about DeFi and its greater implication on today’s world and what the future holds for alternative financial options. The research and results show DeFi as a growing movement with real life implications and use cases, but still in its infancy with legislative challenges yet to be properly addressed

The Power of Debt: Identity and Collective Action in the Age of Finance

The Debt Collective is organized around the possibility for radical action within and against finance capitalism. In the wake of the 2008 financial crisis it was often hard to understand how finance intersected with the everyday lives of ordinary—and especially, poor—people. But in the years since, it has become increasingly clear that mass indebtedness—from the mortgage crisis to student debt, criminal “justice” fines and fees to municipal austerity—is a direct effect of the conflict between debt payments generating value as securitized investments (mortgage backed securities, municipal bond offerings) vs. their role in providing shelter, food, and the ability to merely get by. In the age of finance, debt has become an immersive, systemic problem; but it is one that, in its ubiquity, may hold the seeds of its own solutions. As oil tycoon JP Getty famously quipped: “If you owe the bank $100 that’s your problem. If you owe the bank$100 million, that’s the bank’s problem.” Student debt alone stands today at 1.5 trillion dollars. Together, arguably, we can be the banks’ problem. This is the provocation of the Debt Collective: how can we reframe debt from an issue of isolation and shame to a platform for collective action and political mobilization

Lessons from Case Study of Secured Transactions with Bitcoin

There has been some discussion about the flaws in using secured transactions law, Article 9 of the Uniform Commercial Code (U.C.C.), to govern commercial transactions involving Bitcoins as collateral. Flaws necessitate the urgency of immediately fixing of the existing law. In the case of Bitcoins there is still much to learn about the marketplace for secured transactions with Bitcoins as collateral. The rapid change in technology, the speed of new ideas proposed, the constant announcements of adoption and adaptation of smart contracts in transactions, the volatility in cryptocurrency value, the endless reports of scams, and the rise of dark pools and shadow banking all suggest that we should not touch Article 9 for now. The Article 9 system is adequate to accommodate cryptocurrencies-full of imperfection and uncertainty- at the present time. Haste will yield waste. Instead, we should study the lending market with cryptocurrencies as collateral and observe how law and technology have been utilized in fostering the development in the market. Case study is most appropriate, and lessons can be drawn in monitoring and evaluating whether change in Article 9 law is necessary. This article begins with an observation of the responses from the U.S. Securities and Exchange Commission (SEC), the Chicago Board Options Exchange (CBOE), the Chicago Mercantile Exchange (CME), the U.S. Internal Revenue Service (IRS), and the National Conference of Commissioners on Uniform State Laws (NCCUSL) relating to Bitcoins. These responses together will pave the way for the lending market with Bitcoins as collateral. Part II examines the market for lending with Bitcoin through three different case studies: direct lending, L2B platform, and invoice financing for small and medium sized businesses. Part II will explain how Unchained Capital, Secured Automated Lending Technology (SALT) Lending, and the HIVE Project are conducting their lending business model. Part III then focuses on how lenders have crafted creative solutions rooted in technology to capture the market and address legal concerns. Part IV offers some final thoughts on the current state of law and technology in crypto lending

PropTech 3.0: the future of real estate

Right now, thousands of extremely clever people backed by billions of dollars of often expert investment are working very hard to change the way real estate is traded, used and operated. It would be surprising, to say the least, if this burst of activity – let’s call it PropTech 2.0 - does not lead to some significant change. No doubt many PropTech firms will fail and a lot of money will be lost, but there will be some very successful survivors who will in time have a radical impact on what has been a slow-moving, conservative industry. How, and where, will this happen? Underlying this huge capitalist and social endeavour is a clash of generations. Many of the startups are driven by, and aimed at, millennials, but they often look to babyboomers for money - and sometimes for advice. PropTech 2.0 is also engineering a much-needed boost to property market diversity. Unlike many traditional real estate businesses, PropTech is attracting a diversified pool of talent that has representation from different regions of the world and entrepreneurs from a highly diverse career and education background. Given the difference in background between the establishment and the drivers of the PropTech wave, it is not surprising that there is some disagreement about the level of disruption that PropTech 2.0 will create. In this research we interviewed over 50 real estate professionals, entrepreneurs and capital providers. From one side, we heard that none of these startups know what they are doing and that young entrepreneurs misguidedly regard real estate as a sure thing. From the other, we heard that real estate people are not good at strategy and are determined to protect inefficient fee-earning practices. 2017 seems to mark a turning point. PropTech 2.0 has been building such mass and momentum that it will change the world. But real estate is a slow moving asset class, and the real estate industry is highly conservative. How will this play out? This, the Said Business School Oxford’s first real estate research report, maps this emerging sector and focusses in particular on the impact of tech change on the character of this enormous asset class

Insured? Good! Designing a Blockchain-based Credit Default Insurance System for DeFi Lending Protocols

The rising popularity of blockchain has cleared the path for developing numerous decentralized finance (DeFi) applications. However, insurance solutions for DeFi applications are still missing. Therefore, this article presents a smart contract-based P2P credit default insurance solution using the Design Science Research Method. The design presents an approach to decentralize insurance systems by reducing the number of intermediaries. The evaluation of the artifact shows that blockchain and smart contracts can provide financial inclusion, reduce costs and automate processes in insurance processes