Implementing a Financial Derivative as Smart Contract

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