Implementing a Financial Derivative as Smart Contract

Fries, Christian P.; Kohl-Landgraf, Peter; Paffen, Björn; Weddigen, Stefanie; Del Re, Luca; Schütte , Wilfried; Bacher, David; Declara, Rebecca; Eichsteller, Daniel; Weichand, Florian; Streubel, Michael

doi:10.2139/ssrn.3342785

Implementing a Financial Derivative as Smart Contract

51 Pages Posted: 19 Mar 2019 Last revised: 28 May 2019

See all articles by Christian P. Fries

Christian P. Fries

Ludwig Maximilian University of Munich (LMU) - Faculty of Mathematics; DZ Bank AG

Michael Streubel

Cofinpro AG

Date Written: February 25, 2019

Abstract

In this note we describe the application of existing smart contract technologies with the aim to construct a new digital representation of a financial derivative contract. We compare several existing DLT based technologies. We provide a detailed description of two separate prototypes which are able to be executed on a centralized and on a DLT platform respectively. Beyond that we highlight some insights on legal aspects as well as on common integration challenges regarding existing process and system landscapes. A very detailed methodological overview of the concept of a smart derivative contract can be found in https://ssrn.com/abstract=3163074.

Keywords: Smart Derivative Contracts, Derivative, Settlement, Distributed Ledger, Blockchain, Code is Law

JEL Classification: G20, K2

Suggested Citation: Suggested Citation

Fries, Christian P. and Kohl-Landgraf, Peter and Paffen, Björn and Weddigen, Stefanie and Del Re, Luca and Schütte, Wilfried and Bacher, David and Declara, Rebecca and Eichsteller, Daniel and Weichand, Florian and Streubel, Michael, Implementing a Financial Derivative as Smart Contract (February 25, 2019). Available at SSRN: https://ssrn.com/abstract=3342785 or http://dx.doi.org/10.2139/ssrn.3342785