20 April 2018
Zohar Hod

Post-trade derivatives

Zohar Hod - truePTS

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Dark and Transparent Connectivity

04 October 2017  |  5321 views  |  0

When we look into our vast universe, we see celestial objects, gases, asteroids and meteors. What we don’t see, and often ignore, is the matter that interconnects everything. Dark Matter, or as renowned astrophysicist Lisa Randall calls it, “transparent matter”. This matter constitutes 85% of the total universe and essentially holds everything together. It is so “dark” that if you were to heat it up, it would not reflect any light.

Now, let’s apply this concept to our financial system. What we usually take for granted is our interconnectedness. What is it that allows our systems to flow in a natural way? What are the forces that move data, trades, money, and other financial information between market participants? It’s middleware. In the real sense of it, middleware is a standardized protocol and communication layer that helps facilitate inter-operability. Obscure from sight or fame, it’s the data pipes, the APIs, the protocols and routing algorithms that make the system work. Glory is not found in this area of our financial system which has been systematically underinvested and unnoticed and in turn, has led to a decaying, old system that produces discontent and has not evolved very quickly. It’s completely transparent, yet a very important part of the eco system. I am saying now, No More!!!

The peer to peer economy and the distributed future of our economy does not mean the end of middleware providers, but rather the evolution of their offering. Middleware was thought to be dead when the internet was invented, yet, middlemen and their platforms have only thrived under the distributed environment. Middleware will still be the glue that connects blockchains as well as the glue that connects payments and processing while remaining “dark” or “transparent”, but the way access is given or paid for and how governance is agreed upon and what framework is needed to onboard participants into the distributed economy is yet to be determined (or is it? 😊). In my opinion, access would not be transactional in the future but more of a utility with a subscription service that offers other added value services.

Gone are the days when transactional costs are part of our decision making. We should let access be a privilege, a membership, or an idea meritocracy. A type of a club, if you will, where members contribute to the future evolution of the product with an open forum of participants sharing the transparent connectivity and utilizing new and exciting services offered by the members. With the right governance, the “celestial” participants can expand the eco system as they need to. While “celestial” bodies (participants) will remain in constant business model movement and should focus on their core functions in order to survive, dark matter will continue to allow this expansion and movement seamlessly. Down with the tyrants of monopolies! The transparent connectivity is for us, all of us!

 

 

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job title CEO
location New York
member since 2017
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truePTS delivers an innovative, independent platform, focused on revolutionizing all post-trade workflows in derivatives and related financial products. I'm eager to help continue building and scaling...

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