[oggy]

Shameless plug: the problems that you describe are almost exactly what we're trying to solve with DAML and Canton [1]. From the Canton whitepaper:

Building distributed applications that involve multiple organizations is hard with today’s technology. For each application, all organizations must agree on the data encoding, transport mechanisms, and interaction rules, and all must implement their part of the interaction correctly, including authentication and authorization. Once implemented, such an application often becomes a silo: there is no general convenient, secure and privacy-preserving way to integrate such applications and compose the business workflows that they automate.

The big problem is bootstrapping the network; as you say, setting up yet another format (DAML in this case) is a huge ask. But we're starting to see the beginnings of a network, as in the next couple of years the Australian [2] and north-bound (i.e., mainland China) Hong Kong securities [3] will be accessible through DAML.

[1]: https://canton.io [2]: https://www2.asx.com.au/markets/clearing-and-settlement-serv... [3]: https://www.ledgerinsights.com/hkex-daml-smart-contract-stoc...

[doonesbury]

Some financial service providers (i.e. those who do NOT buy low sell high) might try to move into the custodial market. Assessing the risk there is beyond my pay grade I don't know how smart that'd be ... but we can observe it's not common. If that did happen clients could use that provider's IT system to do trading and voila since all data is at one provider, some kinds of reconciliation is easier. In short, market consolidation.

There's tactical steps too that can partially overcome the independent IT systems, say, getting the custodian to send data realtime, sending it realtime on the trader's behalf to the recon entity ... I'm not sure what custodial service provides think about that ... presumably they would if they could probably hampered by their own IT systems like the rest of us.

The final approach is what appears immediately above: traders and custodians --- generally any set of business entities N who need to compose data --- publish to a virtual shared DB. I'm gonna read the white papers and follow-up afterwards.

[oggy]

I don't have a financial services background myself, so assessing I can't really comment on the risk of consolidating custodianship and trading. But market consolidation will at some point run into legal and jurisdictional limits (data sovereignty), if not other ones first (do I really trust that giving you all this data doesn't give you an edge?). The idea behind the virtual shared DB is that you don't have to outsource the data, but you can still transact (with strong consistency) over data shared with many entities.

Like I said, I don't have a background in financial services myself, but there are people on my team who have vowed to never have to do reconciliation again. As you seem to wear the same scars, I'm very curious to hear your thoughts on the whitepaper based on your other good comments in the thread. Feel free to e-mail me (address in profile) or post here.

[mianos]

The chance of replacing every banking system at once is not at all possible. Even just replacing CHESS all at once is pretty much impossible. Just how many years late is it and how many more until it's actually used by all participants?

[oggy]

The idea is not to replace every banking system, but to create a network with a sufficient technological edge over existing solution and sufficient business value.

CHESS is definitely a complex beast. The go-live date has moved from 2021 to 2023, AFAIK at the request of the participants. To your question when it will be directly (as in, through DAML) used by all participants - I guess at the point where it generates enough value that it's advantageous for them to use it.