Decentralised Trading (2006)

This is an old presentation (original PDF here) outlining an idea I originally had back in 2006 to decentralise the financial markets by allowing counterparties (banks initially, individuals later) to trade directly with one another, bypassing centralised exchanges and brokers.

The idea was that the market counterparties could trade directly with other counterparties they had a pre-existing relationship with and, therefore, “trusted”. Later, central counterparties (CCPs) would remove the need for a pre-existing relationship by providing a certification and novation service (by, for example, making available information about what types of trades they would be prepared to novate on behalf of the counterparty and/or digitally counter-signing the order messages).

The idea was that, eventually, brokers would become gateways to the market for individuals, with a chain of trust from the CCPs through the brokers to the individuals, so that a regular Joe with an online brokerage account could trade directly with big investment banks.

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I recently came across some notes I’d made while I was working on the idea in 2008.

P2P_OTC_1

P2P_OTC_2

P2P_OTC_3

 

Written by jackgavigan

January 28, 2016 at 3:29 pm

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