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Blockchain and Competition – CORBETT – June 2018 OECD discussion


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This presentation by Isabelle Corbett, Senior Counsel & Director of Regulatory Affairs, R3, was made during the discussion “Blockchain and Competition” held at the 129th meeting of the OECD Competition Committee on 8 June 2018. More papers and presentations on the topic can be found out at

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Blockchain and Competition – CORBETT – June 2018 OECD discussion

  1. 1. 11 OECD Hearing on Competition Policy and Blockchain Technology Isabelle Corbett, Senior Counsel & Director of Regulatory Affairs
  2. 2. R3 is an enterprise software consortium working with an ecosystem of over 200 financial institutions, regulators, trade associations, professional services firms and technology companies to develop Corda, the only blockchain platform designed specifically for businesses.
  3. 3. 1 Introduction to blockchain / distributed ledgers
  4. 4. Distributed Ledgers / blockchain at a glance Cryptography to ensure identity authentication for each transaction Non-repudiation/immutability to preserve integrity of data and create an audit trail Smart contracts for the automatic execution of business logic when certain criteria are met Shared ledger so each participant sees the same view of the same data, updated in real time, subject to permissioning Distributed consensus to ensure the state of the ledger represents the agreed-upon truth of all stakeholders Ledgers Distributed Ledgers Blockchains Cryptocurrency
  5. 5. How it works? Distributed ledgers / blockchain § Records of agreement (consensus), § with a secure (cryptographic) audit trail, § maintained and validated by several separate computers (network nodes). Consensus Agreement mechanisms evaluate information provided by participants to ensure consent among all relevant parties in an entry Visibility § When a transaction is added to the ledger, the network is almost-instantly privy to this new version § Distributed ledgers leave behind a cryptographically assured audit trail and timestamp § All parties in the network keep a copy of their view of the ledger
  6. 6. Blockchain enables competing firms to: • Collaborate and maintain one secure database • Run software that communicates with their counterparts and • enables a near-instant update in their systems without relying on intermediaries, reconciliation, matching or manual fixes 6
  7. 7. The Problem: •Legacy infrastructure is leading to a constant increase in IT expenditure •Reconciliation and dispute resolution are leaving firms with vast inefficiencies •Clearing and settlement that relies on third parties, records loans and securities, is forcing unavoidable cost implications on the industry •Firms face difficulty navigating identify verification - subjecting financial services to billions in fines •Trade processes are slow, manual, cumbersome and expose risk Financial services is forced into a cost trap The impact: $215bnNEW FINANCIAL LLP Projected IT spend by banks globally in 2017 Total institutional operating cost base $2.6trNEW FINANCIAL LLP KEY FACTORS:
  8. 8. Blockchain can transform financial services There is one version of data and one version of the truth The Solution: R3 will drive blockchain adoption across financial services and commerce more broadly through Corda The entire transaction will be streamlined. All parties in a transaction will have access to the exact same data A digital single source of identity will enable a seamless exchange of documents between banks and external agencies 1 2 3 Transactions between Financial Institutions will no longer be subject to friction and delay. This will lead to a reduction in reconciliation labor as third parties will not need to clear and settle transactions
  9. 9. S E C T I O N 02 Corda Blockchain solution for financial institutions and beyond
  10. 10. Blockchain for every business Available as open source software under an Apache II license or as an enterprise platform 10
  11. 11. Immutability Records stored in a cryptographic manner assures lineage and evidence of tampering Mutual verification Shared facts are agreed upon by a variety of consensus mechanisms Consistent Shared Facts on Ledger Records of shared facts including financial agreements are consistent across entities, only with those party to the transactions Smart Contracts Business Logic is encapsulated and executes in a deterministic, tamper evident manner Security & Privacy Transaction information is propagated only to relevant nodes to ensure strict data privacy, whilst maintaining the assurance of validity and uniqueness Interoperability Corda retains this privacy but allows any node to transact without creating islands of assets or liquidity issues Easy Integration Re-use existing developer skills and make integration with bank systems easy and safe. Contracts can be coded in modern, standard languages like Java Transparency Consensus achieved at individual deal level, rather than system level. Supports a variety of consensus mechanisms Corda
  12. 12. Portfolio of projects
  13. 13. Obstacles on blockchain’s path to adoption 1. Privacy – How to protect data? 2. Interoperability – How to talk to each other? 3. Governance – Who makes the rules? 4. Scalability – Why store every transaction?
  14. 14. Accessing R3 and Corda 3
  15. 15. Why? Financial services is a stringent and complex environment where technological change is difficult to implement It is an ever-complex challenge to keep up with the pace of change within the market Blockchain will transform the operating model for financial services and enable financial services firms to embrace technological advances What have we created? Corda - blockchain technology built for financial services and designed to stand up to the complexity of the industry R3 surrounds this with services, applications and a network that ensure effective deployment How can we work together? R3 develop partnerships and enable firms that specialize in financial services to leverage the potential of Corda for their clients 15 R3 is redefining the foundations of financial services and beyond
  16. 16. Our global ecosystem As the largest collaborative group in enterprise blockchain, we encourage everyone in our network to come together to develop or consume solutions on Corda that have the potential to transform entire industries.
  17. 17. The Corda Partner Network Delivery Partners Partner Solutions Infrastructure / Technology Partners Network Service Providers
  18. 18. Network Effect Across Largest Global Ecosystem Mutualize development, platform and network costs across 100+ member global ecosystem Regulators: 20+ Regulators and Central bank members including; •HKMA •AMF Montreal •Abu Dhabi Global Markets Partners: 100+ partners which includes system integrators & advisory, independent software vendors, Infrastructure/ technology partners and network service providers
  19. 19. What does being a member offer? Matchmaking members with ISVs, technology companies and system integrators Support to build CorDapps from technical experts 3 years of experiments, unlimited research and whitepapers on blockchain Fast track ideas by developing POCs and market proposition quickly Working groups at every phase on the path to production Corda training— an intensive structured two- day course Advance delivery with dedicated Corda business and technical experts Collaborate with industry experts MEMBER A foundation built on knowledge and support from within the industry to drive blockchain adoption with Corda
  20. 20. R3 Education and Training Since March, we have delivered classroom Corda training to 1000+ developers worldwide Online Education Corda Training Corda training for developers available both virtually and in-person §Corda Certification §Corda Train-the-Trainer §Corda Enterprise §Building a CorDapp §Corda for Non-Programmers §Corda for Attorneys §Corda for Architects §Corda for Regulators Interactive, web-based education via, an online training platform §Installing Corda §What is a Notary? §Understanding Identity §Legal Prose §Understanding Oracles §Understanding Consensus §DLT 101 §The Corda Ledger 20
  21. 21. Thank you New York 11 West 42nd Street, 8th Floor New York, NY 10036 London 2 London Wall Place, London, EC2Y 5AU Singapore 80 Robinson Road, #09-04 Singapore, 068898