.png)
According to the web definition of disruptive technology, it ‘is an innovation that creates a new market and value network and eventually disrupts an existing market and value network, displacing established market leading firms, products and alliances. The term was defined and phenomenon analyzed by Clayton M. Christensen and coworkers beginning in 1995.’
From this definition it seems that with the commencement of the development of our quants in 1997 we were part of the first wave of innovators of disruptive technology. We didn’t realise this at the time because we were excited to be developing innovative products for our clients. Our vision was to enhance what they were doing – not to displace one market sector to create another because we understood that traditional self-directed trading could co-exist with automated trading technology. Our purpose was and still is to create sustaining technologies that continually improve our product performance for the benefit of the end user.
Since those naïve days, there has been an explosion in the development of automated algorithmic trading and of course the advent of Cryptocurrencies such as Bitcoin, Ethereum, Dash and Ripple which trade on their own Blockchain technology platform. I was intrigued to find out more about this ‘new’ technology and how it would work with trading traditional markets through traditional brokerages and not so much these currencies trading through traditional brokerages as we have seen of recent times. I again used the web for my research and found the definition of Blockchain is ‘a digital ledger in which transactions made in Bitcoin or another Cryptocurrency are recorded chronologically and publicly.’ The first question that came to my mind was how could this technology coexist with global jurisdictional legislation and compliance that dictates how financial services licensing works and how we as an industry operate with the end user.
To find out more, I recently attended a, Women in Blockchain Meet Up, in Brisbane, Queensland, Australia (where I live and work) presented by a good colleague of mine Katrina Donaghy who is one of the founders of Civic Ledger. She was brilliant in that she was able to break down this complex topic to simple terms however raised even more questions for me about how our industry could use this technology. How would it handle routine processes such as issuance of financial services licenses, Continuing Professional Development (CPD), Know Your Client (KYC) procedures and obligations, Introducing Broker (IB) registrations and payments, opening of client accounts with brokerages, funding those accounts, ability to trade all financial markets on one platform and payment from transactions to name a few? What would happen to the current data feeds from companies such as Bloomberg and Reuters? At present all of these procedures are largely paper-based, costly, complex with significant risks from errors and fraud while data feeds can be manipulated and latency of executing still playing a significant role. What would happen to all of the countless white label brokerages that pop up like fields of mushrooms on a daily basis? From my very limited understanding at this point, Blockchain technology would obliterate the current jurisdictional barriers and boundaries that exist between countries in addition to the very way we operate our businesses on a daily basis while at the same time providing more transparency and permanency for all in a public register.
I think that the introduction of Blockchain technology is disruptive technology in the true sense of the phrase unlike the development of automated algorithmic trading that could coexist with self-directed trading because it will create a new market and value network that will disrupt an existing market and value network displacing established market leading firms, products and alliances. I would be interested in connecting with likeminded colleagues to learn more about this area because like the World Wide Web and Internet we didn’t think that we needed it but now is so entrenched in our daily lives that we take it for granted like breathing.
Since those naïve days, there has been an explosion in the development of automated algorithmic trading and of course the advent of Cryptocurrencies such as Bitcoin, Ethereum, Dash and Ripple which trade on their own Blockchain technology platform. I was intrigued to find out more about this ‘new’ technology and how it would work with trading traditional markets through traditional brokerages and not so much these currencies trading through traditional brokerages as we have seen of recent times. I again used the web for my research and found the definition of Blockchain is ‘a digital ledger in which transactions made in Bitcoin or another Cryptocurrency are recorded chronologically and publicly.’ The first question that came to my mind was how could this technology coexist with global jurisdictional legislation and compliance that dictates how financial services licensing works and how we as an industry operate with the end user.
To find out more, I recently attended a, Women in Blockchain Meet Up, in Brisbane, Queensland, Australia (where I live and work) presented by a good colleague of mine Katrina Donaghy who is one of the founders of Civic Ledger. She was brilliant in that she was able to break down this complex topic to simple terms however raised even more questions for me about how our industry could use this technology. How would it handle routine processes such as issuance of financial services licenses, Continuing Professional Development (CPD), Know Your Client (KYC) procedures and obligations, Introducing Broker (IB) registrations and payments, opening of client accounts with brokerages, funding those accounts, ability to trade all financial markets on one platform and payment from transactions to name a few? What would happen to the current data feeds from companies such as Bloomberg and Reuters? At present all of these procedures are largely paper-based, costly, complex with significant risks from errors and fraud while data feeds can be manipulated and latency of executing still playing a significant role. What would happen to all of the countless white label brokerages that pop up like fields of mushrooms on a daily basis? From my very limited understanding at this point, Blockchain technology would obliterate the current jurisdictional barriers and boundaries that exist between countries in addition to the very way we operate our businesses on a daily basis while at the same time providing more transparency and permanency for all in a public register.
I think that the introduction of Blockchain technology is disruptive technology in the true sense of the phrase unlike the development of automated algorithmic trading that could coexist with self-directed trading because it will create a new market and value network that will disrupt an existing market and value network displacing established market leading firms, products and alliances. I would be interested in connecting with likeminded colleagues to learn more about this area because like the World Wide Web and Internet we didn’t think that we needed it but now is so entrenched in our daily lives that we take it for granted like breathing.