Wednesday, April 6, 2016

Legal twit, ICDA, ASX, Google, GLEIF...Sydney and Boyles Law

I've been pondering the Legal Framework of Bitcoin / Blockchain.

Back to basics...if you don't have a legal framework, you don't have a product. So then, what is the legal status of Bitcoin (or indeed any crypto-currency)...and hence what is the status of a dematerialised 'token' on a blockchain?

The more fundamental question is... is it property (an instrument of bata, a security, a 'something tangible) or is it a currency (which is a slightly different animal to property)?
...and why do we care?...

In many legal systems, receipt of stolen property is treated very differently to receipt of stolen money. If a pawn shop accepts a stolen bike, its operators are expected to return it to its rightful owner if discovered, without reward. If a coffee shop takes a stolen fiver, it can keep it.

In short:
In the UK and EU it is leaning towards 'currency' (or rather not property).
In the US it is leaning towards 'property' (or rather a security / financial instrument, not currency)
Typical, looks like we're not getting off to a great start in uniform global standards.

At the end of all this mumbo jumbo, it just gets back to the plain simple context. What are we trying to do? If we are using blockchain / DLT for currency and cryptocurrency things...looks like the UK/EU is barking up the right tree. But this might be a bit Bitcoin centric. If we are looking at using blockchain / DLT in more wide ranging applications....then the US approach looks more future proof.
Ultimately, it is not the technology that should be is the application. (I appreciate we all know this already...but it is just interesting to see how it is already playing out). Some of the links / sources I found interesting below.

Several people have recommended Twitter to me.
So, I have joined the twitterati.
I'm still finding my 'wings' in this medium but I'f you're on twitter, please feel free to tweet me.

If you're at the FinTech storm event tonight please do say hi!

Have a great week all,


UK Guidance from HMRC.
...As an EU tax, the VAT treatment for cryptocurrencies adopted by the UK must be consistent with any treatment that may eventually be implemented across the EU...
The 3 aspects commented on are: Corporation Tax (CT), Income Tax (IT) and Capital Gains Tax (CGT).

Nice round up from the US here:
Bitcoin: Questions, Answers, and Analysis of Legal Issues:
...On June 3, 2015, New York State became the first state to establish a framework for regulating digital currency businesses when the New York State Department of Financial Services (NYSDFS) issued regulations providing for prudential supervision of virtual currency businesses operating in New York State. p 14
...the CFTC stated that Bitcoin is a virtual currency...p29

A nice round up for every jurisdiction in the world here:
(note, the foot notes are the most useful part).

This site could also be really useful...but it doesn't appear to be upto date.
Regulation of Bitcoin in Selected Jurisdictions

The UK Digital Currency Association’s response to HM Treasury’s Digital Currencies : Call for Information

Digital currencies: response to the call for information

First of all a plug for the upcoming ICDA Blockchain Conference, London, April 19-20, 2016
Beyond the technology buzz, how is the blockchain shaping the future of banks, exchanges, derivatives markets and commodities from a business development perspective?
*** If you're not an ICDA member please let me know and I can arrange a discount code for you.

Another piece that grabbed my interest given the pioneering DLT work of the ASX.
ASX chief Elmer Funke Kupper resigns
"Normally, you ride this thing out," he told The Australian Financial Review. "It's not right, it's unfair, it's trial by media but it's also the responsibility of running one of the most respected institutions in the country. But this is me rising above it. It destroys my life but for me it's rising above it." 

A bit of bitcoin folklaw...with a source (well, as much as you want to trust a Guardian editor!) to back it up.
Bought in 2009, currency’s rise in value saw small investment turn into enough to buy an apartment in a wealthy area of Oslo

Meet the Man Who Will Hack Your Long-Lost Bitcoin Wallet for Money

When software and hardware are intertwined, does a warranty mean you stop supporting the hardware or does it mean that the manufactuer can intentionally disable it without consequence? 17 months ago, Google acquired Revolv, a very cool home automation hub.
*** I found this interesting because of the context. Can 'bricking' software make your hardware investment redundant? Think Planet of the Apes, some hardware can run long after the software support has lapsed. I like to retire my kit when I choose, not when my software developer does.
It's also an interesting insight into how Google is looking at the content of each of the divisions under Alphabet. (e.g. Google Nest).
Also a couple of nice piccies that explain Alphabet, Google's new parent company.

One area that I want to expand on is "Master Data". There is much discussion about this...but before expanding too much on the point I think more work needs to be done on understanding various data elements. (and where we go for Golden Source...and what that means for consensus).
I very much like the work of GLEIF.
In October 2015, the Global Legal Entity Identifier Foundation (GLEIF) launched the Global LEI Index, which provides information, updated daily, on all LEIs issued to date. Any interested party can easily access and search the complete LEI data pool free of charge using the web-based LEI search tool developed by GLEIF.

Some sites I've been browsing and putting into context in my own mind map of the evolving blockchain eco-system. Some great content out there...and a whole host of generalisations too!   (Etherium permissioned ledger developed with
Counterparty ­
Mastercoin ­
Sidechains ­
Swarm ­
Coinprism ­
StorJ ­
MaidSafe ­
Factom ­
Openname ­
Bitmessage ­


*** Interesting exercise. Bringing modern media methods to history (kinda like trying to make history accessible via Horrible Histories!). I wonder how different things would have been with coordinated communication channels. Military emphasis on comms has always been valued...just don't get me started on the Byzantine Generals problem!
*** Bonus!
You can get some C++ source code to solve the problem here.

Starfish-killing robot close to trials on Great Barrier Reef
*** I love the reef and diving.

Spencer Tunick visits Hull...the city of culture.
*** Hull, culture, nudity...and I thought they just did Rugby League.Will you be there?

Is Hell exothermic or endothermic?
An oldie, but a goldie. Dunno why I was talking about Boyles law this week but this nails it for me.
BTW, if Hell was finite...then given the rate of souls entering Hell I believe all Hell would already have broken loose. I also believe in the goodness of human nature. Therefore, ultimately, I believe Hell will indeed freeze over.
...and Geoff...Avogadros number just for you (since you're more of an 'ideal' gas typa guy)!

Stacked Deck
The effects of race on eBay auction pricing.
*** I fear this is sad, but true. The sample size is a bit too small to really carry weight in my mind - but as a generalisation, I do think it reflects a deeper problem in society today. Despite all the noises we make about tolerance and respect there is still something 'there'. But we'll get there, slowly but surely - look how far we've come in a generation. Gotta love kids (and the education system for throwing them together).

Go Filter!
A perfect contra to Stacked Deck.

A blockchain "Token" joke! WooHoo!
Q: A man pushed his car to a hotel and lost his fortune. What happened?
A: He's playing monopoly!
(OK, it's not a digital token)

Be wise to yourself and take the risk.
~Behold the turtle. He makes progress only when he sticks his neck out~

A fool can throw a stone in a pond that 100 wise men can not get out.
Saul Bellow

Friday, March 18, 2016

AlphaGo home, half life, T+2 down under...I (didn't) take a pill in Ibiza

Much this week has been made of the 'success' of AlphaGo.

This got me thinking about success. What is success? either human terms or machine terms.

Some commentators remarked that AlphaGo made some 'unusual' moves. And these moves were at a turning point - AlphaGo thought it had the game in the bag and then it just changed gears to defend the win. i.e. The machine just wants to doesn't differentiate winning by a point or running up 50 points. Bit like playing a soccer game and after scoring a goal you spend the rest of the day doing that 'off side' rule thing they do (sorry for the over simplification - but you get the point). 
AlphaGo is a win and grind. It doesn't have a killer instinct or 'match flare'. The 4th game that Lee Sedol won was based on an offensive play. The boy can play 'Big Points'. Tennis is a bit boring when it is all percentage shots.

So what is AlphaGo vs. Lee Sedol? Is it some kind of AI and neural network? I think it is a big computer with millions of data points. It peaked my interest in how it was coded and the process they went through. Unfortunately this is a paywall I haven't read it but what is interesting is all the data tables, which you can see:

Lee Sedol is one super efficient process. It doesn't look like he consumes a lot of food. My guess is that AlphaGo consumes vastly more amounts of energy (think watts) as it trawls through all the permutations of life....including the known universe of AlphaGo games. Big data to me. What Lee Sedol has done is eliminate thousands of data points that are pretty useless. He's applied his 'bounded rationality'. People forget...and forgetting can be a gift (don't carry some of that redundant clutter with you - Beats - shout out to you!) AlphaGo has a big brain. If we evolved like Alpha go I visualize an alien form with a top heavy head.

Lee Sedol did mention that in human match play you get a lot of visual clues too - breathing, movement, gestures etc. AlphaGo has a pretty good poker face by all accounts. So under stress, not stressed. Is this good? I'm not sure. In the human world we can do some pretty powerful peak processing is a stressed environment. On minimal data points we can quickly choose, fight, flight or freeze. (OK, I might have picked option one a bit too often).

And then we get to pattern recognition. And this is where the whole AI point comes for me. What AlphaGo is magic at is playing the instruments...every instrument in the orchestra....but can he compose a melody?AlphaGo is always the same or a statistical derivation of what has gone on before. Lee Sedol is playing with the pieces - he's being creative.

Now I don't think there were many ethics in the game. But if there were, my guess is AlphaGo would have played by the rules...the coded rules (Ohhh, scary, man V machine). Lee Sedol acts on an entirely different plane.

....They collected moves from these machine-versus-machine matches and fed them into a second neural network. This neural net trained the system to examine the potential results of each move, to look ahead into the future of the game....
...AlphaGo had calculated that there was a one-in-ten-thousand chance that a human would make that move...

Anyway, enough AlphaGo bashing. What I think is really exciting, is not the sheer industrial beauty of computing power, but rather the analysis of the processes to win. This is trying to break down emotional intelligence into a process. An ontology if you like. And it is by looking, and measuring, the process that we can begin to define limits, tolerances and possibly behaviours. This is stuff we all know, but don't accurately measure.

AlphaGo will be able to serve me a brilliant beer, no doubt. I might even shock him with an order for a G&T or a green beer on St Patricks day. There is a better than 1:10K chance he'll have the stock to hand. However, if I want to create a new cocktail, with a raspberry over.

There is a story of a famous photographer in New York who went to a dinner party. The Host greeted him and said "I have seen your photos and they are amazing! You must have a fantastic camera". Later on, during the meal, the photographer said "this dinner tastes delicious, you must have a fantastic kitchen".

Happy St Patrick's Day!

US Bank Consolidation. Unfortunately, this did not make the cut this week.

Have a great week-end.
(I won't be playing computer chess).



Bitcoin mining rate and half life.
The current Bitcoin reward is 25 BTC per block.
All the half life stats here:

I also think blockchain will introduce a whole new, nuanced, vocabulary.
For example coinbase (the field that allows the block reward) as opposed to the wallet provider
Good glossary here:

For example what are the Rails that blockchain can run on?
Wht is NXT?

Ethcore introduce parity....
....the fastest and lightest Ethereum block processing engine amongst the available clients
(their claim - not mine!)

BitShares, Lisk Hop on Azure Blockchain Bandwagon
So, who's on MS Azure BaaS?
BitShares an open-source, decentralized asset exchange software platform
Lisk, a cryptocurrency and JavaScript-based developer platform for custom blockchains allows objects to be securely sold, rented or shared without a brokering agent.
Syscoin services for merchants, including escrow, digital asset storage and other buying and selling services.
Augur, an Ethereum blockchain-based decentralized prediction market platform.
This was a good slide share on blockchain from Ethereum


Goldman revamps electronic stock trading to catch rival
Goldman hired the tech-savvy Mahajan to revamp the business in March 2015. Since then, he has hired dozens of technologists and support staff to elevate Goldman's position in a fast-growing slice of the market and win back business from its chief competitor, Morgan Stanley.

Welcome, ASX ad NZX to T+2!

Sometimes we overlook the context of materiality and proportionality
notes: 2015 ASX did 190 million the year...for a notional of Aussie 1,112.5byn
notes: 2015 NZ did 1.4 million the year...for a notional of Kiwi 40byn.  (p68)
Today Chi-X (oops, now Bats) did 1byn trades for a 10 byn Euro notional

Integration of market infrastructure
This is a 'promo' clip from the ECB trying to make the EuroSystem, SEPA, Target2 and T2S, more accessible (I guess)
I'm not sure it will sway any Brexit 'out'ers or leave my local MP with an interest in Market Structures as a vote winner.

The European Supervisory Authorities (EBA, EIOPA, ESMA - ESAs) published today the final draft Regulatory Technical Standards (RTS) outlining the framework of the European Market Infrastructure Regulation (EMIR).

Duco And CME Group Team Up To Provide Innovative Data Control Service To Member Firms


I loved this "Dilemma" - brought a tear to my eye.

I found this interesting in how a message can be 're=purposed' this...

Fracking : An English duck that will never fly
....Because burning gas is more efficient than coal, it provides a 50 per cent advantage in terms of emissions of CO2 emitted per unit of energy. However that is only half the story because of the methane that escapes into the atmosphere during the exploration, production, storage, and distribution phases of the gas life-cycle....
Methane is the second most important greenhouse gas with a Global Warming Potential (GWP) 87 times greater than an equivalent mass of CO2 over a 20 year time frame. If fugitive emissions of methane exceed 2 per cent of production, then gas is no better than coal from a climate change perspective.

Tuesday, March 8, 2016

LSE, The rise of Ether, Bye bye Chi-X...and the best thing out of Melbourne

LSE in the news and as ever, more news and reports on blockchain than one can read in a week.

In the past I've levied 2 criticisms at the LSE. One, that is an incumbent institution and Two, that the sum of the parts do not unlock the value of the group. Time to re-visit this.

First of all, I'm a little surprised by how little credit Xavier is getting. Lets look at the share price under his tenure. At MiFID (Nov '07), LSE was around STG 17+ a share. Post MiFID Rolet comes in, after LSE shares have had a steady fall with the fan fare of competition to circa STG 7 a share. Now, it is circa STG 28 (and rising...some say even STG 32 is attainable)...and the loss of market share has been contained.
So, respect to Xavier and his advisors. They've obviously been listening to their customers.

So, One. From 2009, with the Millennium acquisition LSE started a journey of not behaving like an incumbent. And that journey continued with, Two, a tidying up of the sum of the parts...grabbing the LCH stake and going from a board representative to an outright owner, likewise with FTSE (alongside the background of the benchmarking hype). I must say I'm surprised by the full value that has now been 'unlocked' from the LSE holdings.

I am also surprised by how little press I see about Euronext. With LSE in play...and a debate about Brexit on the cards....I think Euronext offers great value to those that walk away empty handed from the LSE dance. A real Eurozone play..(read ECB "location policy")...and foothold (all the more so if the Clearnet stake is divested).

Some other bits of history:
NYSE Group, owner of the New York Stock Exchange, offered €8 billion (US$10.2b) in cash and shares for Euronext on 22 May 2006,
In December 2012 Intercontinental Exchange announced plans to acquire NYSE Euronext, owner of Euronext, in an $8.2 billion takeover

LSE chief Rolet to retire after Deutsche Börse merger
London Stock Exchange Group: A timeline of the deals and attempted transactions

He joined the Board of the London Stock Exchange in March 2009, and became CEO in May. Under his leadership, the London Stock Exchange Group acquired MillenniumIT (2009),Turquoise Holdings Ltd (2010), FTSE Group (2011), TRS (2011), GATElab Srl (2012), EuroTLX Srl (2013),LCH.Clearnet (2013), (2014), ExactPro (2014) and the Frank Russell Company (2014) from Northwestern Mutual, the Asset management arm of which was sold in October 2015 to TA Associates and Reverence Capital Partners. In October 2015, LSE Group launched Curve Global, a new Futures Exchange co-owned with Barclays Bank, Bank of America, Citi, Goldman, Sachs, Societe Generale and the Chicago Board Options Exchange.

(Poor old Proquote got ejected along the way)

LSE share price history (MiFID came into effect Nov 2007....and you can see the LSE share price slide from that point.)

DLT / Blockchain

And so it happens....Ether has overtaken the marketcap of Ripple (leaving Ether second only to bitcoin).
Look at Ethers value appreciation here.
(My advice has been to switch from Bitcoin into Ether)

No, Bitcoin is not the future of securities settlement

Deloitte’s seventh annual Tech Trends report identifies eight trends that are likely to disrupt businesses in the next 18-24 months – from blockchain to augmented reality, the Internet of Things, socially responsible applications of technology and more.

Banking on Blockchain: Charting the Progress of Distributed Ledger Technology in Financial Services.
A new paper produced by Finextra in association with IBM explores the progression of blockchain.
(this paper requires registration)

Deutsche Bank calls for co-operation with fintech firms on B2B services.
In a new whitepaper (PDF), the German bank acknowledges that over the last decade a host of non-bank players, from PayPal to Stripe to Apple Pay to Bitcoin, have upended the payments market, turning models on their head.
Full paper here:

Global regulators to probe fintech threats to financial stability
The Financial Stability Board is to evaluate the potential for systemic risk posed by emerging innovations in financial technology
National regulatory bodies have so far taken a softly-softly approach to the growing fintech sector for fear of stifling potentially beneficial creative innovation.

FCA to extend Innovation Hub; advance research into blockchain tech
The discussion, inevitably, turned to the application of distributed ledger technology in financial service, with Woolard setting out some of the regulatory and consumer issues that will need to be discussed as the technology evolves.
"For example, how individuals gain access to a distributed network and who controls this process, along with what data security exists for users are vital considerations for us as a regulator," he says. "The FCA continues to monitor the development of this technology but is yet to take a stance until its application is clearer."

IOSCO Securities Markets Risk Outlook 2016
International securities regulatory body Iosco has identified the disruptive threats from technological innovation as a key risk factor facing financial markets in 2016.


BATS drops Chi-X name in global rebrand

IEX Sick of SEC Delays on Exchange Approval
....These “flash boys” are starting to lose their patience....

NYSE Embarks on High-Stakes Technology Shift for its Exchanges
....moving its markets on to a single software platform called Pillar, a move that its owner Intercontinental Exchange Inc. hopes will allow it to shed its image of having clunky, out-of-date technology...

SEC to focus on asset management, disclosure, market structure in 2016
In equity market structure, the SEC will finalize rules on the oversight of active proprietary traders and on alternative trading systems. It will also work to enhance order routing disclosures and the risk controls on trading algorithms
There is limited time for the commission to accomplish any goals, with the administration of President Barack Obama coming to an end in less than 12 months. Traditionally, the head of the SEC, a politically appointed position, is replaced when a president leaves office. The SEC is currently down two members from its full complement of five.

Esma Pledges to Ease Reporting Burden on Trading Firms
ESMA is examining ways it can standardise trade reporting requirements, amid continued complaints that firms are being forced to do the same work several times over to satisfy different rules. The regulator has asked its Market Data Standing Committee to consider how to reduce the burden on the finance industry in the wake of a swathe of different reporting requirements, contained in legislation such as the Markets in Financial Instruments Directive, the Securities Transaction Financing Regulation and the European Market Infrastructure Regulation. Finance firms complain that the rules require them to provide the same information in subtly different formats, duplicating work and pushing up costs.
*** Sorry, this story behind a paywall.

JPMorgan's ‘London Whale’ Surfaces to Say '12 Loss Not His Fault
In his letter, Iksil said the government’s decision not to prosecute him helps show he’s not to blame. In July, the U.K. Financial Conduct Authority abandoned a proposal to fine Iksil 1 million pounds ($1.4 million) and refrained from banning him from the industry.

Full letter available here:

Morgan Stanley scales back equities financial technology investing group


USB Type-C: One cable to connect them all

A lovely blast from the past...
The Seekers - Morningtown Ride (1964 - Stereo, enhanced video)
...and one of the best things I know to come out of Melbourne!

Tuesday, February 23, 2016

DLT pigeon holes, Acronyms, Railways and Commercials.....PE2, LME & Hemp

As ever time flies. If I don't get this out tonight...another week will zip by.

One reason I blog is because writing forces me to formulate / pigeon hole my thoughts. Another reason I blog, and this blog is searchable, is because sometimes things don't easily lend themselves to a pigeon hole. (so if they're in the blog, at least I can reduce the scope of my search).

I'm finding I'm putting things into 3 broad buckets:
1. Blockchain / DL Technology: The technical and academic side of things. From Network theory to cryptography...and to a whole new set of acronyms. BTC, DLT, PoW, PoS etc. Are you losing sleep as you ponder will Hyperledger be a competitor of Ethereum? (Yes, in my view). Which codex is better? There is an institute for that type of question.
2. Blockchain / DLT Ecosystem: Here I draw a parallel with the railways. ( Blockchain has everything from engineers through to rails. Knowing where things fit and how they are interconnected is pretty obvious in railways...but we're less familiar with the blockchain environment. Do we care what gauge rails we run on - if we're at speed yes - but ultimately that will be an issue blockchain beneficiaries nwill be oblivious to. Still, right now, it helps to know.
3. Blockchain / DLT business. That is the use cases, the consortia, the white papers and the general industry positioning. (My next personal assignment is to do a 600 odd word piece on some of the recent white papers).

Anyway, some of the news that I managed to digest....and there is sooo much more out there that I simply have not had a chance to review. Hey ho, as it ever was. Graham Bishop is about the only guy I know that could keep up with all of Europes market reforms...clearing and settlement was more than enough for me. I'm sure there is a blockchain God out there too....but right now, I don't think anyone can corral everything into one place...but please, please do correct me if I'm missing something!

A plug for ICDA (the old SFOA for us long in the tooth). I'll be speaking there on 19th April.
Let me know if you're going. I'd love to catch up.

Have a great week all (what is left of it)...and WooHoo, lets race into the first week of Q3 '16 on Monday.



BNP Paribas : takes keen interest in Blockchain
Caisse des Depots Group.
French consortium: avec AXA, BNP Paribas, Blockchain Solutions, le Groupe BPCE, Cellabz, le CNAM, CNP Assurances, le Crédit Agricole, Croissance Plus, Paymium, et le Pôle de Compétitivité « Finance Innovation »
The principle objective is to develop and prototype usage scenarios related to banking, finance and insurance businesses.

Japan Exchange Group and IBM to run proof-of-concept blockchain test

Linux, IBM Share Bold Vision for Hyperledger Project, a Blockchain Fabric for Business
The Blockchain platforms that we are currently tracking are:

What are the chief differences between Ethereum and Ripple's Codius? Which one is most likely to succeed?

Welcome to the Institute for Blockchain Studies!

New Market Map Defines the Blockchain Ecosystem

Consensus-as-a-service: a brief report on the emergence of permissioned, distributed ledger systems By Tim Swanson

ISITC Europe Breaks down Blockchain and the Future of FinTech

Wall Street Is Trying to Beat Silicon Valley at Its Own Game
Banks race to beat the patent trolls—and Silicon Valley.

Inside Multichain: A Build-Your-Own Blockchain Service for Banks


BATS Chi-X Europe and Traiana enable OTC equity trade clearing

The EU & its Partners: Attracting International Investors: How can the EU work with its Partners?

In 139 years the LME has only moved four times; it was established in 1877 above a hat shop in Leadenhall Market.
The LME was acquired by Hong Kong Exchanges & Clearing Limited in December 2012.

Seed Commodities Exchange to launch in partnership with GMEX
Seed CX’s launch products include new weather derivatives and industrial hemp swaps, options and forwards.

News (and stuff)

People are sharing Private Eye's brilliant skewering of the media's Jeremy Corbyn headlines

The Independent newspaper confirms an end to print production

If countries were the size of their stock markets

Interesting dynamic maps..

A graphical history tour...

Monday, February 8, 2016

EoC, WEF, HFT and Rubics cube....Netflix and Qantas

Another week and another barrage of blockchain papers. This week piccie from

This week Euroclear come out with their paper. The Citi Digital Money paper also available online after being formally presented.

Also included are links to the Davos papers (World Economic Forum). Some of them, like the future of jobs are nothing new, just confirm what we arleady know (we hardly know what the job specs will be in 10 years time).

A couple of HFT stories. Interesting to read Aquis taking order handling action. Also liked the work of the Tradebot guys in using technology to solve the rubics cube. For those that like management, I very much enjoyed the Netflix insights. New found respect for their culture (assuming it endures). And a magic safety video from Qantas for all those frequent fliers.

Have a great week all.


Blockchain (DLT)

Blockchain in Capital Markets
(24 pages)

Releasing the flow of digital money: Hitting the tipping point of adoption.

Davos: World Economic Forum Tackles Fintech
Nice piccie. (p12)
Nice presentation (178 pages)

Jump to pages 44 and 45 of the roundup.
This introduces the reports released at Davos.

such as the future of jobs...

Goldman and IBM join Digital Asset Holdings funding round
Goldman Sachs and IBM have jumped aboard Digital Asset Holdings' recent investment round, taking the blockchain startup's haul to more than $60 million.
Love this comment:
...if the tool of the month is a hammer, everything around you looks like a nail....

Bank of America loads up on blockchain patents
Bank of America is in the process of filing 20 new blockchain-related patents, adding to the 15 it has already submitted to the US Patent and Trademark Office (USPTO).
.....describing the potential commercial application of its patents as "very unclear", Beasant said: "(It's) very important in the intellectual property world to reserve our spot even before we know what the commercial application might be."...
I just don't see how 'very unclear' patents can be enforceable.
Rather disappointing GS 'esk behaviour from mother Merrill.

Smart Securities Trading Platform Symbiont Raises $7 Million

Blockchain: Catalyst for Massive Change Across Industries

CIO Explainer: What Is Blockchain?

Kynetix appoints exchange industry pioneer to drive Commodity Blockchain Consortium


Aquis Exchange to ban predatory high-speed trading
“This is absolutely not against HFT,” said Haynes

Olathe co-workers build a superfast Rubik’s Cube robot for a Guinness World Record attempt
(They work together at Tradebot Systems.)

BNP Paribas to simplify its wealth management structure

LSE Said to Hire Morgan Stanley's Ross to Run Derivatives Venue: CurveGlobal
(previously Project Rita)

BBA calls on European Commission to ensure financial regulation supports competition and growth
(80 pages!)

AFME responds to Commission’s call for evidence
Equity primary markets and trading report: Q4 2015

AFME publish first pan-European SME guide
All at:



Here's to the Crazy Ones, Think Different
Apple Confidential - Steve Jobs on "Think Different" - Internal Meeting Sept. 23, 1997
1997. Steve Jobs in shorts, relaxed, during internal meeting with Apple executives and managers, just a few weeks after his return to Apple, speaks briefly about planned changes in company (pipeline, products, distribution changes) and then presents first informations about planned "Think Different" campaign, now legendary and iconic... Samples of TV commercial, outdoor, posters, and press ads.

Don't Touch That Dial! By Vaughan Bell
Worries about information overload are as old as information itself.
A respected Swiss scientist, Conrad Gessner, might have been the first to raise the alarm about the effects of information overload. In a landmark book, he described how the modern world overwhelmed people with data and that this overabundance was both "confusing and harmful" to the mind. It's worth noting that Gessner, for his part, never once used e-mail and was completely ignorant about computers. That's not because he was a technophobe but because he died in 1565.
Socrates famously warned against writing because it would "create forgetfulness in the learners' souls, because they will not use their memories." He also advised that children can't distinguish fantasy from reality, so parents should only allow them to hear wholesome allegories and not "improper" tales, lest their development go astray.
As literacy became essential and schools were widely introduced, an 1883 article in the weekly medical journal the Sanitarian argued that schools "exhaust the children's brains and nervous systems with complex and multiple studies, and ruin their bodies by protracted imprisonment." Meanwhile, excessive study was considered a leading cause of madness by the medical community.

Why Luxembourg wants to mine asteroids
Later this year, Nasa’s Osiris-Rex mission will attempt to return a 60g sample from an asteroid to Earth at a pricetag of around $1bn.

Qantas Safety Video
Published on 2 Feb 2016. Airbas A380 version

“Ideally, what should be said to every child, repeatedly, throughout his or her school life is something like this: 'You are in the process of being indoctrinated. We have not yet evolved a system of education that is not a system of indoctrination. We are sorry, but it is the best we can do. What you are being taught here is an amalgam of current prejudice and the choices of this particular culture. The slightest look at history will show how impermanent these must be. You are being taught by people who have been able to accommodate themselves to a regime of thought laid down by their predecessors. It is a self-perpetuating system. Those of you who are more robust and individual than others will be encouraged to leave and find ways of educating yourself — educating your own judgements. Those that stay must remember, always, and all the time, that they are being moulded and patterned to fit into the narrow and particular needs of this particular society.”
― Doris Lessing, The Golden Notebook

Monday, February 1, 2016

Complex change, Citi DigiMoney, Imperial College....Aussie Day and farewell Chi-X (as we knew it).

The piccie is one sent to me by my brother. It resonates with me for 2 reasons. One is the practicalities of the diagram (some versions label 'treadmill' as 'false starts', but having lived the dream(s) I think treadmill far more appropriate). The other is that it shows for transformational projects to succeed there are combinations of dependencies. I don't think management nees to be added to the mix (already covered in skills and resources) but I do think there is space for an emotional intelligence dependency. You can have skills, resources and incentives but if the people mix is won't fly. Maybe a purist catches this under resources...but to me resources is just bandwidth. It is the synthesis that is critical.

I also attended the Citi Digital Money Symposium. I was very impressed by the pedigree of the speakers. I was also very impressed with the practical and theoretical work of Imperial College's Cryptocurrency Research and Engineering department.
Even the BBC is covering Blockchain these days....
(Includes more coverage from IC's Prof. William Knottenbelt)

Yet another white paper out last week: this one from DTCC.

Happy, belated, Australia Day and farewell to Chi-X. The last of the constituent parts have found a new home. CXE to BATS, CXC to Nasdaq, CXA and CXJ etal to Flowers.

Have a great week all!



New DTCC White Paper Calls for Leveraging Distributed Ledger Technology to Solve Certain Long-Standing Operational Challenges
The paper, titled “Embracing Disruption – Tapping the Potential of Distributed Ledgers to Improve the Post-Trade Landscape,” notes that while today’s financial market infrastructures have a proven track record of providing stability, reliability and certainty, they are often quite complex, siloed and not equipped for 24/7/365 processing. DTCC believes a secure distributed ledger, with complete and traceable transaction history for a set of assets that is shared and accessible only between trusted parties, could provide significant operational improvements as well as further mitigate risk and reduce post-trade costs.

Accenture Report:
Top 10 Challenges for Investment Banks 2016
The impact of digital technology on investment banking
** Challenge 4 is. of course, Blockchain technology.

Microsoft to Offer Ethereum-Based Services on Azure
The software giant has formed a partnership with Brooklyn-based Consensys, a startup that is building products and services for Ethereum, an alternative platform to bitcoin. Through the partnership, customers of Azure, Microsoft’s cloud-based business service, will have access to tools that will allow them to experiment with and build products that can digitize and automate a plethora of operations, from securities trading to cross-border payments to corporate accounting, and offer them to their own customers.
Vitalik Buterin, a 21-year old programmer and writer, launched Ethereum this summer as a platform for what are called smart contracts. While bitcoin was designed with the single purpose of exchanging digital currency, Ethereum has broader goals. Ethereum’s mandate is to provide businesses with a platform on which products and services can be built that simplify various business functions and cut out the need for third parties. Anything that can be digitized, cryptocurrencies, derivatives trading, securities trading and settlement, even property titles, is a potential service on Ethereum.

Microsoft Bets That Bitcoin-Style Blockchains Will Be Big Business
Microsoft Positions Itself as the Perfect Home for Bitcoin-Style Blockchains | MIT Technology Review
Microsoft wants financial companies to host their blockchain software inside Azure. It has recently struck partnerships with several startups working on blockchain software for banks and other big corporations.


JC Flowers buys Chi-X
Stock exchange Chi-X Australia along with Chi-X Japan and Chi-Tech Hong Kong have been sold for an undisclosed amount to global private equity house JC Flowers & Co
Chi-X Global owned Chi-X Australia, but the ultimate owners were Nomura's Instinet, and minority owners UBS, Bank of America Merrill Lynch, GETCO LLC, Goldman Sachs, Morgan Stanley, and Quantlab Group LP. 

Regulation / Banking

Correspondent central banking model (CCBM)
Procedures for Eurosystem counterparties
Update effective as of 25 January 2016
** This is a nice updated explanation of the CCBM model.

FESE Response to ESMA on indirect clearing arrangements under EMIR and MiFIR

Belgium gets cold feet on financial transaction tax
The European Commission proposed taxing financial services in 2011, in the wake of the financial crisis. Lacking unanimous approval, an “enhanced cooperation” group of 11 countries agreed to push the project: France, Germany, Italy, Portugal, Spain, Greece, Belgium, Slovenia, Slovakia, Estonia and Austria. Estonia has since withdrawn, arguing that the costs associated with the tax would be higher than the revenues.
Some other countries in the group, such as Slovenia, now appeared reluctant too and the withdrawal of two or more countries would sink the proposal, since EU rules require at least nine countries to back such a procedure.

Too big to behave?
European Bank Resolution: Making it work!
From the start of 2016, new rules for bank resolution are in place – as spelled out in the Bank Recovery and Resolution Directive (BRRD) – across the EU, and a new authority (the Single Resolution Board, or SRB) is fully operational for resolving all banks in the eurozone.
The implementation issues of the new regime are enormous. Banks need to develop recovery plans, and authorities need to create resolution plans as well as set the minimum required amount of own funds and eligible liabilities (MREL) for each bank. But given the diversity in bank structures and instruments at EU and global level, this will be a formidable challenge, above all with respect to internationally active banks.


BBC2 to broadcast final moments of assisted suicide campaigner
How To Die: Simon’s Choice was filmed over last few months of Simon Binner’s life following motor neurone disease diagnosis
...and a poignant LinkedIn profile..

Happy Australia Day!
Australia Day 2016: 'Epic' water slide video goes viral

Friday, January 22, 2016

Bitcoin developers, Healthy BTC?, DA and ASX, UK science office report, ISITC

Now Mike Hearn has left Bitcoin and that exposes Number 1 of those problems. Bitcoin code relies on the goodwill of developers. The 'Hearn' effect is just another reason why I favour permissioned networks. Those like minded souls, that are permitted, driven by a common commercial cause, have an ownership and governance structure that focuses users on maintaining the best code base.
Bitcoin's problems, to my way of thinking, continue. Latency remains an issue...which is in part driven by block size, which needs to be increased (Bitcoin XT is the reason cited for Hearns departure). Without an increase in block size transaction fees will continue to rise...and this kills another aspect of Bitcoin - it's relevance as a medium for micro-payments.
The biggest conceptual problem for me with Bitcoin are its Green credentials. It's carbon footprint is just hideous. Right now a lot of that carbon is in China. Access to cheap a falling Bitcoin price...I think will result in fewer miners...which then raises the issue of concentration risk (in what should be a distributed network).
Bitcoin sure has some growing pains ahead! What do I feel? Block sizes must increase (to defray transaction costs) and mining needs to become 'cheaper', greener and more transparent (environmental arbitrage which is all taking place behind China's great firewall).

Credit to Dan Page for the piccie. I have a lot of respect for graphic artists who convert concepts in images. I liked this one.

What an interesting couple of weeks for Digital Asset. From being reported at the end of last year as struggling and now they raise 50myn. I'm sure this is just around a tweaking of some of the commercials and having ASX come on board as a 'use case'. 

I'll be attending the inaugural ISITC Blockchain working group meeting on the 4th of Feb. I look forward to catching up with people at this event. If you'd like to attend, I'll see what I can do, however I'll need 48hrs notice (security reasons).

Whatever your leisure - may it be a pleasure!



Distributed Ledger Technology: beyond block chain A report by the UK Government Chief Scientific Adviser
Press Release:
*** Just been reading this and it looks like they lifted my analogy with the Irish electricity market.

JPMorgan: 'aggressively' investing in blockchain tech and robotics.
A note sent to employees by Daniel Pinto, head of JPMorgan's Corporate and Investment Bank, shows that the lender wants to ensure its $9 billion (£6 billion) investment in technology continues in 2016. Blockchain, big data, and robotics are the focus for JPM. Working groups are also being pushed to develop "market-leading platforms," with no detail on what they might be.

UBS Blockchain Partner Clearmatics Taps Investors for Funds

Artists, designers and innovators show how the data explosion is transforming our world.
03 Dec 2015 — 28 Feb 2016
I plan to attend this. I expect it to be more thought provoking in the way the different people visualise things rather than 'educational'.

The Linux Foundation, announced a new collaborative effort to advance the popular blockchain technology. The project will develop an enterprise grade, open source distributed ledger framework and free developers to focus on building robust, industry-specific applications, platforms and hardware systems to support business transactions.
Early commitments to this work come from Accenture, ANZ Bank, Cisco, CLS, Credits, Deutsche Börse, Digital Asset Holdings, DTCC, Fujitsu Limited, IC3, IBM, Intel, J.P. Morgan, London Stock Exchange Group, Mitsubishi UFJ Financial Group (MUFG), R3, State Street, SWIFT, VMware and Wells Fargo.

R3 connects 11 banks to distributed ledger using Ethereum and Microsoft Azure
The R3-managed private peer-to-peer distributed ledger connected Barclays, BMO Financial Group, Credit Suisse, Commonwealth Bank of Australia, HSBC, Natixis, Royal Bank of Scotland, TD Bank, UBS, UniCredit and Wells Fargo.
Participants were able to explore the technology's potential to execute financial transactions instantaneously across the global private network. The banks simulated exchanging value, represented by tokenised assets on the distributed ledger without the need for a centralised third party, said R3 in a statement.

Blockchain standards builder R3 has opened its doors to non-bank financial services firms including funds, exchanges, clearing houses, standards bodies and infrastructure companies, from early in 2016.
R3 also announced the addition of another 12 banks, taking the total to 42 who have pledged their financial and technical support since launching in September.
The latest bank additions are: BMO Financial Group, Danske Bank, Intesa Sanpaolo, Natixis, Nomura, Northern Trust, OP Financial Group, Banco Santander, Scotiabank, Sumitomo Mitsui Banking Corporation, US Bancorp and Westpac Banking Corporation. R3 said the initial window for admittance of new bank members is now closed.

Imogen Heap shows how smart music contracts work using Ethereum.
"We are going to aim to try and do things in an automated fashion. And so we have these things called smart contracts. These are essentially code; rules written into code which determine what happens when money comes in or when certain actions take place.
"And so we have things here called policies. These are things that the artist might decide on; the terms under which they are willing to allow their music to be used.
"So in the case of just the stems, for example, you could say, I'm happy for them to be downloaded for non-commercial use for $45. If you want to use it in a commercial record then I'll give you 50% of the rights and the recording but I still own the song.
"This is pre-known to everybody, recorded on the blockchain meaning it's transparent and visible to everybody. And when you enact these policies by buying music, this happens automatically – everybody knows who is getting paid and how much.

Digital Asset Closes Funding Round Exceeding $50 Million From Thirteen Global Financial Leaders
Digital Asset Holdings, LLC, a developer of Distributed Ledger Technology for the financial services industry, today announced that it has raised more than $50 million in funding from a broad range of leading firms from all corners of the international financial ecosystem consisting of ABN AMRO, Accenture, ASX Limited, BNP Paribas, Broadridge Financial Solutions, Inc., Citi, CME Ventures, Deutsche Börse Group, ICAP, J.P. Morgan, Santander InnoVentures, The Depository Trust & Clearing Corporation (DTCC) and The PNC Financial Services Group, Inc.

A buzzy bitcoin startup led by Blythe Masters is reportedly struggling to raise funding

ASX Limited (ASX) today announced that it has selected US-based firm Digital Asset Holdings, LLC (Digital Asset) to develop solutions for the Australian market utilising Distributed Ledger Technology.


Hike Hearn leaves Bitcoin.
The resolution of the Bitcoin experiment

How to measure the health of Bitcoin? (as per Tim Swanson)
1. Number of Transactions per Day:

2. Number of Bitcoin Days Destroyed (this measures the 'age' of Bitcoins moving across the network. A low BDD represents recently used coins changing hands...a high BDD represents 'old' coins 're-entering' (or being released) back into circulation...a bit like G'ma pulling an old 50 quid note out from under the mattress that she'd been saving for a rainy day....or like someone panicking and selling out of all their Bitcoin positions)

3. Total Transaction Fees

4. Total Output Volume. (this measures the total value of all Bitcoins changing hands on a day - which is a slight overstatement as it also 'double counts' any change being returned to a sender). 


The importance of client money...
(CASS, CASS resolution Pack and CMAR)
FCA fines Bank of New York Mellon 126 million pounds
[April '15]
FCA Policy statement on Resolution Pack.

Ghost Writing

The Challenge of Change
(Ghost article I wrote on the tripple whammy of MiFID, EMIR and Basel III)