Zurich – The two major Swiss banks UBS and Credit Suisse are teaming up with SIX and other global financial players to launch a new blockchain initiative. The project aims to improve the quality of counterparty reference data, which is required as part of the upcoming implementation of the MiFID II regulation in January 2018.
MiFID II is a new legislative framework for regulating the securities trade in Europe. Within the regulation framework, each financial institution is expected to have an individual Legal Entity Identifier (LEI). The reference data pertaining to the LEI for each entity includes industry classification and data from the European Securities and Markets Authority (ESMA).
UBS, Credit Suisse, the Swiss stock exchange operator SIX, the British bank Barclays, the Belgium institute KBC and the financial data provider Thomson Reuters are now collaborating to improve the quality of this reference data through anonymous reconciliation with industry counterparts, using Ethereum smart contracts.
“Traditionally, a firm such as ours quality checks data against multiple sources but we do not have a quality baseline against peers,” Christophe Tummers, head of Data at UBS, said in a statement. “Through using blockchain-inspired smart contracts, the reconciliation of data can happen in almost real-time for all participants, anonymously.”
“MiFID II creates complex data management challenges for businesses, and this initiative presents a unique opportunity for firms to benchmark content alongside their peers before it is used in regulatory reporting,” said Mark Davies, global head of RMS Data Services at Thomson Reuters.
The project is currently in a pilot phase using 22,000 non-sensitive LEI reference attributes for cash equity issuers. The pilot should be completed by the end of January, with further, staged rollout dependent on the findings.