FU | March 18-24, 2017

Leading Off

The SEC shortened to two days from three the settlement cycle for broker-dealer transactions; IBM is working with Swiss financial exchange operator SIX on a cybersecurity compliance tool, and with Canadian banks on digital identification management; global software and IT firm SAP joined the Hyperledger project; and two OnDeck executives penned an op-ed advocating for regulatory change.

This Week’s Top Stories

SEC adopts T+2 settlement cycle.  The Securities and Exchange Commission (SEC) adopted an amendment to shorten the settlement cycle for most broker-dealer securities transactions.  The new two-business day (T+2) cycle, down from three days, is “designed to enhance efficiency” and “reduce risk” in the securities marketplace. The SEC will enforce the rule beginning September 5.

Experian rolls out new software tool.  The credit bureau partnered with Utah-based software firm Finicity to launch its Digital Verification Solutions tool, which verifies the income and assets of loan applicants using “real-time financial-data aggregation.” The product is “part of a Fannie Mae pilot program . . . to provide automated loan validation technology to mortgage lenders.”

Fifth Third invests in network upgrades.  The bank announced that it would invest $112 million over the next five years to upgrade its electronic network “as part of an effort to modernize its branches and partner with fintech firms.”

Nets hires Chainalysis to ensure AML compliance.  European payments processor Nets is working with DLT compliance firm Chainalysis to help ensure that its “virtual currency transactions comply with anti-money laundering rules.” The Chainalysis software “detects suspicious activity in real time and provides investigation tools for law enforcement and others.”

SAP joins Hyperledger.  The global software and IT solutions company joined the Linux Foundation’s Hyperledger project as a Premier member, gaining a seat on the Hyperledger Governing Board. “Having support from an enterprise software and cloud leader like SAP is an important step,” said Brian Behlendorf, Executive Director of Hyperledger.

Canadian banks work with IBM on ID management.  Several Canadian banks, including RBC, Scotia, and TD, have partnered with IBM to manage customers’ digital identities via blockchain. The Concierge system, running on the IBM blockchain, will allow customers to “verify their identity to anyone” privately and securely via app. Its launch is planned for later in 2017.

IBM unveils “Blockchain as a Service.”  IBM is rolling out a cloud-based, IBM-hosted blockchain service based on the Linux Foundation’s open-source Hyperledger Fabric. Jerry Cuomo, IBM’s VP of blockchain technology, touted the BaaS offering as a means of helping customers “create, deploy and manage blockchain networks.”

Coinbase now offers margin trading.  The DLT firm, which operates the GDAX cryptocurrency exchange, added margin trading functionality to its platform. Coinbase designed the new functionality “to fit within the boundaries of the Commodity Exchange Act.” Eligible traders may now use Coinbase to place “3X leveraged orders on Bitcoin, Ethereum and Litecoin order books.”

OnDeck execs talk regulatory change.  In an American Banker op-ed, OnDeck’s Daniel Gorfine (associate general counsel) and Jeff Martel (head of compliance) present four policy proposals to “advance financial innovation.” Among the four, Gorfine and Martel advocate for the “passporting” of state licenses to “harmonize state laws” and reduce regulatory burdens.

McKinsey on blockchain for government.  In a new article, global consultancy McKinsey outlines how blockchain technology could be used by governmental agencies to “simplify the management of trusted information, [improving access to] critical public-sector data while maintaining the security of this information.”

Have a great weekend!
Joe Oehmke and Austin Tuell

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