Overview of Emerging Blockchain Architectures and Platforms for Electronic Trading Exchanges

20 Pages Posted: 10 Nov 2016

See all articles by Gareth Peters

Gareth Peters

Department of Actuarial Mathematics and Statistics, Heriot-Watt University; University College London - Department of Statistical Science; University of Oxford - Oxford-Man Institute of Quantitative Finance; London School of Economics & Political Science (LSE) - Systemic Risk Centre; University of New South Wales (UNSW) - Faculty of Science

Guy Vishnia

University College London - Financial Computing and Analytics Group, Department of Computer Science; ITG, Inc. - ITG London

Date Written: August 31, 2016

Abstract

Several international electronic primary financial exchanges have begun to announce they will explore the adoption of blockchain technology in their trade processing and reporting for execution and clearing. Therefore, in this work we will begin by providing an overview of the new exchange regulations appearing in different jurisdictions around the world, including EMIR, Dodd Frank, MiFID I/II, MiFIR, REMIT, Reg NMS and T2S. We will discuss some of their key features, specifically in regard to transparency reporting and trade/transaction reporting requirements.

The current status of regulatory requirements for reporting and the massive data sets such regulation will generate as well as the significant challenges faced by firms and market participants in meeting such requirements in an automated manner, is a key to the discussion in this paper. We explain different blockchain solutions based on blockchain architectures being currently developed in the market place to handle key aspects of transparency and pre and post trade reporting requirements that will be universal in applicability in both UK, Europe and U.S. regulations.

In the process of this commentary we will discuss the different emerging architectures and features that are being developed in a range of different blockchain technologies. This will include details on different forms of blockchain technology including : permissionless blockchains, where anyone can participate in the veri cation process, i.e. no prior authorisation is required and a user can contribute his/her computational power, usually in return for a monetary reward. Permissioned blockchains, where verification nodes are preselected by a central authority or consortium. Public blockchains, where anyone can read and submit transactions to the blockchain and Private blockchains, where this permission is restricted to users within an organisation or group of organisations. We detail which market participants and which blockchain architectures are emerging as possible solutions for addressing pre and post trade reporting requirements in modern electronic exchanges.

Keywords: Blockchain; Blockchain transaction reporting; Trade reporting; Transparency

JEL Classification: G2

Suggested Citation

Peters, Gareth and Vishnia, Guy, Overview of Emerging Blockchain Architectures and Platforms for Electronic Trading Exchanges (August 31, 2016). Available at SSRN: https://ssrn.com/abstract=2867344 or http://dx.doi.org/10.2139/ssrn.2867344

Gareth Peters (Contact Author)

Department of Actuarial Mathematics and Statistics, Heriot-Watt University ( email )

Edinburgh Campus
Edinburgh, EH14 4AS
United Kingdom

HOME PAGE: http://garethpeters78.wixsite.com/garethwpeters

University College London - Department of Statistical Science ( email )

1-19 Torrington Place
London, WC1 7HB
United Kingdom

University of Oxford - Oxford-Man Institute of Quantitative Finance ( email )

University of Oxford Eagle House
Walton Well Road
Oxford, OX2 6ED
United Kingdom

London School of Economics & Political Science (LSE) - Systemic Risk Centre ( email )

Houghton St
London
United Kingdom

University of New South Wales (UNSW) - Faculty of Science ( email )

Australia

Guy Vishnia

University College London - Financial Computing and Analytics Group, Department of Computer Science ( email )

Gower Street
London, WC1E 6BT
United Kingdom

ITG, Inc. - ITG London ( email )

Ropemaker Place
25 Ropemaker Street
London, EC2Y 9LY
United Kingdom

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