Smart Bonds — Self-Paying instrument

Smart Bonds that use the bitcoin blockchain


Smart Bonds definition and Lexikon

In a recent trial UBS produced a smart-bond, in which risk free interest rates and payment streams were fully automated, creating a self-paying instrument.
Wigan, David. "Bitcoin Technology Will Disrupt Derivatives, Says Banker." Capital City | IFRAsia. Accessed September 12, 2015. http://www.ifrasia.com/bitcoin-technology-will-disrupt-derivatives-says-banker/21202956.article.

"Blockchains will be deployed in the financial realm and then e-commerce," says Wright. Nasdaq is piloting a stock exchange off blockchain technology. UBS is experimenting with "smart bonds" that use the bitcoin blockchain.
One application could be "smart contracts" and micro-contracts that enable you securely to execute tiny transactions. Such micro-contracts offer hope to the unbanked and uncreditworthy. Micro-contracts could fund the internet-of-things, allowing your washing machine to order and pay for its own detergent. "Micro-finance is a killer application," says "Goran", (a potential investor who does not want to reveal his real name) at a Blockchain Workshop this month in London.
Ross, Rory. "Smart Money: Blockchains Are the Future of the Internet." Newsweek. Accessed September 12, 2015. http://europe.newsweek.com/smart-money-blockchains-are-future-internet-329278.

Following the recent announcement of Overstock to offer cryptosecurities, UBS Bank revealed that it is currently experimenting with blockchain-based bonds as well. During his talk at IDX Derivatives Expo in London, Alex Batlin, UBS Bank’s Chief Information Officer for innovation said that they are working on smart-bonds using the bitcoin’s public ledger of transactions.
Batlin described these bonds as “risk-free interest rates and payment streams were fully automated, creating a self-paying instrument.” “The key attraction is that there is no middle or back office, and no registry, so clearly a major impact on costs,” he explained.
Bitcoin-Based Cryptosecurities The Swiss banking giant recently formed The Innovation Lab in April and the smart-bonds is the first technology announced from this venture. The Innovation Lab aimed to explore how blockchain technologies could improve the banking sector, right after the bank published an extensive report about the benefits of the blockchain.
“I believe – and this is my personal view – that blockchain technology will not only change the way we do payments, but it will change the whole trading and settlement topic,” said UBS Group CIO Oliver Bussmann back then.
Jenn, Sarah. "UBS Bank to Launch Cryptosecurites Also?" NEWSBTC. Accessed September 12, 2015. www.newsbtc.com/2015/06/15/ubs-bank-to-launch-cryptosecurites-also/. .

Smart contracts

Szabo has a deep understanding of the way legal contracts and auditing systems work and has applied computing logic to these areas, famously coining the term "smart contracts" back in the 1990's.
IBTimes asked Szabo if he expected smart contract execution and other decentralised apps on censorship-resistant systems like Ethereum to challenge financial and legal institutions with a ferocity similar to that of Bitcoin.
"Yes, eventually moreso, since Ethereum's more flexible and general language can facilitate a much wider variety of commercial and other formal relationships.
"However, the Ethereum community needs to learn to reverse-engineer legal and other traditional patterns instead of trying to re-invent society from scratch. That will take some time to figure out how to do well. It will also take some time for the Ethereum platform to technologically mature, as it has with Bitcoin."
Financial contracts that have clearly-defined rules and can be collateralised are generally viewed as low-hanging fruit within the brave new world of smart contracts. Recently, UBS came out of the bushes with a smart bonds platform built on Ethereum.
Szabo said bonds are good example of a financial instrument suited to smart contracts because they could be backed by other assets that exist on the blockchain, if the bond issuer itself fails to make a payment.
Allison, Ian. "Nick Szabo: If Banks Want Benefits of Blockchains They Must Go Permissionless." International Business Times. Accessed September 12, 2015. www.ibtimes.co.uk/nick-szabo-if-banks-want-benefits-blockchains-they-must-go-permissionless-1518874.

Intelligente Obligationen (German)

(..)Im Londoner Lab wird unter anderem mit einer intelligenten Obligation, einem «smart bond», experimentiert. Emittent und Käufer des Bond treten dabei ohne Mittelsmann direkt in Kontakt, Couponzahlungen und Tilgungen laufen automatisch ab. Die Vorteile sind die Ausschaltung von Vermittlern und die schnellere Abwicklung. Der Bond zeigt aber auch die nächste Entwicklungsstufe der Technologie auf: intelligente Verträge («smart contracts»), die sich selbst durchsetzen. Dies könnte auch ein Einfallstor für den automatischen Regulator sein. So kann beispielsweise der Kauf einer Obligation blockiert werden, wenn der potenzielle Käufer dazu nicht berechtigt ist. Mit der Automatisierung der Compliance, der Einhaltung der Vorschriften, könnten Banken erhebliche Kosten einsparen.
Eine verbesserte Effizienz ist die eine Sache, aber wie verdient man in einer Blockchain-Welt als Bank Geld; wenn es denn solche noch geben sollte? Dies ist die Frage, welche die gesamte Branche am meisten umtreibt. Gebührenmodelle für Dienstleistungen lassen sich weiterhin denken, Beratungsmandate bei der Investmentbank oder in der Vermögensverwaltung können weiterhin lukrativ sein. Aber für was einmal tatsächlich bezahlt werden sollte, steht noch in den Sternen.
Hosp, Gerald. "Digitale Währungen: Die UBS Will Die Zukunft Nicht Verpassen." Neue Zürcher Zeitung. Accessed September 12, 2015. http://www.nzz.ch/wirtschaft/unternehmen/die-ubs-will-die-zukunft-nicht-verpassen-1.18607826.

UBS Schweiz (German)

Die Schweizer Grossbank führt im Londoner Technologie-Accelerator Level 39 ein Research-Lab zur Erforschung der Blockchain-Technologie. Botschafter ist Chief Information Officer (CIO) Oliver Bussmann, der als Mentor verschiedene Fintech-Startups unterstützt. Die UBS schaut sich besonders die Bereiche Bezahlungs- und Handelssysteme sowie Smart Bonds an. Smart Bonds sind so etwas wie voll automatisierte Anleihen.
Finews. "Die Banken Und Das Blockchain-Dilemma." News Banken. Accessed September 12, 2015. http://www.finews.ch/news/banken/19024-banken-ubs-blockchain-auflistung-fidor-citi-goldman-sachs-anz-bnp-paribas-abn-amro-rabobank-societe-generale-oliver-bussmann.

Intelligente Anleihen

Der Clou dabei: Die Innovation via die Blockchain ist unerwartet günstig. Oliver Bussmann (Bild links), der umtriebige oberste Innovations-Verantwortliche bei der Schweizer Grossbank UBS, bezeichnete sie jüngst gar als «Innovation light». Was er damit meinte, demonstrierte sein Team kürzlich im UBS-Laboratorium im Londoner Fintech-Inkubator Level 39. Finews.ch war bei dem Experiment zugegen.

Konkret zeigten die UBS-Mitarbeiter unter Teamleiter Alex Batlin, woran sie in den letzten Monaten gearbeitet hatten: Einer Plattform für den Handel mit «smart bonds», also intelligenten Anleihen, über die finews.ch bereits berichtete.
Gerber, Samuel. "Revolution Des Finanzsystems – Ganz Ohne Kalorien." Finews News Finanzplatz. Accessed September 17, 2015. www.finews.ch/news/finanzplatz/19289-fintech-ubs-smart-bonds-level-39-oliver-bussmann-alex-batlin-r3-credit-suisse-blockchain. 

#Fintech #Blockchain #smartbonds

Bereits heute wird das Undenkbare realisiert. Auch in Ihrer Branche. So drängen neue Player in traditionell aufgeteilte Marktfelder, beispielsweise im Hypothekar- und Beratungsgeschäft oder Zahlungsverkehr. Sie erhalten unter dem Stichwort "Shadow Banking" neue Konkurrenz; die Frage der gleich langen Spiesse mit nicht regulierten Bereichen stellt sich. "Fintech" ist also das Wort der Stunde. Banking wird "smart", digital und vernetzt. Ich bin nicht hier, um über diese Entwicklungen zu dozieren - Sie kennen Sie alle besser als ich. So hoffe ich jedenfalls, Sie wüssten alle bestens, was unter Robo-Advisor, Krypto-Währungen, Blockchain-Technologien und "smart bonds" zu verstehen ist...
Schneider-Ammann, Johann. "Machen Sie Aus Den Herausforderungen Von Heute Die Erfolge Von Morgen!" Eidgenössisches Departement Für Wirtschaft, Bildung Und Forschung. Accessed September 17, 2015. www.news.admin.ch/message/index.html?msg-id=58770. 

Synonym

Smart Bonds, Smart Bond, SmartBond, SmartBonds, Intelligente Anleihen, Intelligent Obligationen

Smart Bonds to buy

Smart Beta for Bonds

Analysis on ETFs. Mutual funds & hedge funds

News and Media

Bitcoinmagazine: UBS Bank Is Experimenting with ‘Smart-Bonds’ Using the Bitcoin Blockchain
During his talk at IDX Derivatives Expo in London, Alex Batlin, Director in UBS’s technology innovation, research and development team shed some light on what the financial institution has been working on in their innovation lab: smart-bonds on the Bitcoin blockchain.
www.bitcoinmagazine.com/20836/ubs-bank-experimenting-smart-bonds-using-bitcoin-blockchain/

Twitter: UBS's smart bond platform built on ethereum #blockchain #fintech
@iang_fc 2: @alexbatlin Is that running on the big Ethereum blockchain - or did you spin up your own?
www.twitter.com/annairrera/status/639065607338598400

Reddit: /r/ethereum/
It is too bad that it is running on a private chain. But this is still a big endorsement of Ethereum infrastructure...
www.reddit.com/r/ethereum/comments/3jd7yy/ubss_smart_bond_platform_built_on_ethereum/

Dow Jones & Company: UBS CIO: Blockchain Technology Can Massively Simplify Banking
"What technology has the potential to disrupt the financial services sector the most? It’s not the tech giants like Apple AAPL +1.46%, Facebook FB +0.08% or Google GOOGL +0.71%, who have all made recent moves into payments services.
According to Oliver Bussmann, CIO of Swiss bank UBS , the biggest disrupting force is the blockchain – the underlying technology behind Bitcoin, the electronic-only currency which is created on computers and isn’t controlled by any government or centralized authority. The blockchain is the open, decentralized online ledger which verifies transactions in the digital currency."
http://blogs.wsj.com/digits/2014/10/27/ubs-cio-blockchain-technology-can-massively-simplify-banking/

Wikipedia: Ethereum
Ethereum is a blockchain-based cryptocurrency that includes a virtual machine featuring stateful user-created smart contracts and a Turing-complete contract language. Ethereum uses its currency unit, Ether, as payment to incentivise a network of peers to provide computational services defined by the smart contracts deployed on the blockchain.
https://en.wikipedia.org/wiki/Ethereum