CORDA Introduction to Case Studies

About ISID
- Established in 1995, as a joint venture between Dentsu and GE- Global network of 11 overseas bases in 7 countries. 2,500+employees.
- Became a Alliance partner with R3

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Agenda１. CORDA Introduction
1. Introduction(movie)
2. Why Corda?
3. Corda Overview
4. Roadmap 2017
5. Usecase

２. ROD Project
1. ROD Overview
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CORDA : Distributed Ledger Technology4

Meet Corda: DLT with a difference

movie1

5

Why Corda?
Enables distrusting parties to reach an agreement on a set of sharedfacts, status and its evolution

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Why Corda?
Broadcast Blockchain
Bank A’s Ledger

Corda DLTBank B’s Ledger

Bank A’s Ledger

Bank B’s Ledger

ID

Fact

ID

FactID

Fact

ID

Fact

1

Bank A pays bank B $5.

1

Bank A pays bank B $5.

1

Bank A pays bank B $5.

1

Bank A pays bank B $5.

2

Bank B purchases bond X from issuing bankA.

2

Bank B purchases bond X from issuing bankA.

2

Bank B purchases bond X from issuing bank A.

2

Bank B purchases bond X from issuing bankA.

3

Bank C purchases bond X from bank B.

3

Bank C purchases bond X from bank B.

3Bank C purchases bond X from bank B.

4Bank C enters a credit default swap withbank D.

4Bank C enters a credit default swap withbank D.

5Bank D owes bank B $10.

5Bank D owes bank B $10.

5Bank D owes bank B $10.

AA

B
DC
Bank C’s Ledger

CFact

ID

Fact

1

Bank A pays bank B $5.

1

Bank A pays bank B $5.

2

Bank B purchases bond X from issuing bankA.

2Bank B purchases bond X from issuing bankA.

3

Bank C purchases bond X from bank B.

3Bank C purchases bond X from bank B.

4

Bank C enters a credit default swap withbank D.

4Bank C enters a credit default swap withbank D.

5Bank D owes bank B $10.

5Bank D owes bank B $10.

2

B

3

5

D

4

Bank D’s Ledger

Bank C’s Ledger

Bank D’s Ledger

ID

1IDFact

3Bank C purchases bond X from bank B.

4

Bank C enters a credit default swap withBank D.

IDFact4

Bank C enters a credit default swap withBank D.

5Bank D owes bank B $10.

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Comparison with other DLT#ItemPublicPrivate

Bitcoin

Ethereum

Fabric v1.0

Corda

1 Purpose

Censorshipresistant digital
cash payment

Execute smart
contract on a
distributed network

Design for variety ofuse cases in businessEnterprise grade platform forfinancial transaction

2 Participation

AnyoneAnyonePermissioned network Permissioned network

3 Data sharing model

Broadcast

Broadcast“Need-to-know” basis “Need-to-know” basis(within channels)

4 Transaction
validation

Proof of Work

Proof of Stake

Chaincode bychannelContract code bytransaction

5 Smart contracts

Limited,deterministic

Turing-complete

Turing-complete

Turing-complete

6 Crypto currency

YesYesNoNo

7 Legal prose“Code is law”

“Code is law”

“Code is law”
(Chaincode)

Attaching legal prose

8 Consensus

Proof of Work

Proof of Stake

Chaincode + Orderer Uniqueness service

9 Transaction style

UTXO Model

Account base

UTXO + Account base UTXO model

10 インテグレーション

Python, LLL

Solidity

GoKotlin, Java, RDBMS(SQL)

11 Virtual machine

Native code

Ethereum virtualmachine

Native code

The Java virtual machine

12 Regulatory
requirement

NoNoNoEnable regulatory nodes

13 Disaster recovery(DR)

Restore frompeers

Restore from peers

Restore from peers

Utilize existing RDBMS

14 Workflow--None

Flow framework

15 Interoperability--

Closed network(channel)Interoperable with Cordapeers

8What is Corda
Purpose：Build an enterprise grade platform specialized infinancial transaction
Data Sharing Model

Transaction style

”Need-to-know” basis, No
broadcastingUTXO model employed,
Execute in parallel

Transaction validation

Regulatory requirement

Validated by parties to thetransaction, No Block, No PoWEnable regulatory nodes,
ensuring transparency

Consensus

Integration

Uniqueness service provided

Kotlin, Java, RDBMS, easy
integration with existingsystems

9About R3-Net- Distributed private network run by R3 (In progress)#R3NodesNetwork participants Description
1 R3 Nodes●●●

Provides membership functions
Issue a SSL/TLS certificate
Distribute IP address to eachnode(Networkmap service)

2 F.I. (Financialinstitution)●

F.I.s transact each other in any
type of financial agreements.

3 Oracle●

Provide external facts such as
interest rate, foreign exchange
rate, etc.
Think of Tomson Reuters andBloomberg.

F.I.
F.I.
Notary●Oracle4 Notary●●

Prevent double spending
Provide signatures when a peer
commit a transaction

5 Regulator●Receive all the transactions
within their jurisdictions
Real-time monitoring
Regulatory reporting

F.I.
Regulator●●10Node internals

R3Nodes

R3Net Applications

F.I.

X-BorderPayments

Trade Finance

F.I.

AML/KYC…

Corda Enterprise Components

NotaryAsset registry

Cash

Trusted Execution

OracleIdentity

Byzantine Tolerant
Notary…
Integration Tools

Corda Core Components (Open Source)State objects

F.I.

Transactions

Simple Notary…

Regulator11Roadmap 2017

Corda Enterpriseannouncementwith key partnersHQLAx announce
live pilot on Corda
Corda
DemoBench
releasedFirst communityorganized Corda
MeetupCorda Open
Source & Enterprise

Corda Training
launched globally
Corda Testnet live

Q1 2017

Corda support
contract launch

Corda open
source Betaannouncement

Q2 2017

Initial R3 Corda
network services
launchCorda open
source v1.0
releasePlatform capableof supporting pilots

Corda
maintenancecontract launch

Corda Enterprisev1.0 launch

Q3 2017

Q4 2017

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Use caseEngaging FCA

https://www.finextra.com/pressarticle/70642/r

https://www.finextra.com/newsarticle/31107/commerzbank-completes-money-market-transaction-over-r3-corda

13Use case

Pilot transaction of LC

Open accounttransaction

https://www.finextra.com/newsarticle/30804/mizuho-completes-dlt-based-tradefinance-transaction/blockchain

https://www.finextra.com/newsarticle/31113/r3-and-12-banks-plan-overhaul-of-open-account-trade-finance/transaction

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Use case

Pilot transaction ofsyndicated loan

Pilot transaction ofCP

https://www.finextra.com/newsarticle/31153/new-dlt-consortium-forms-for-syndicatedlending-market

https://www.finextra.com/newsarticle/31107/commerzbank-completes-money-market-transaction-over-r3-corda15

ROD Overview

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BackgroundMargin requirements for non-centrally cleared derivatives were started in stages
in Japan from September 2016.

MarginVariation Margin(VM)

Notional AmountOver $ 3 trillion

Sep/2016

Over $ 3 trillion
Over $ 2.25 trillion

Sep/2017

Sep/2018

Over $ 8 billion

Sep/2019…

Sep/2020★apply（daily）
3 mega banks
And Nomura★apply（daily）

Insurarance★apply（daily）
MiddleOver $ 0.75 trillion…

★apply（daily）

Securities

Over $ 1.5 trillion…

★apply（daily）

Others
Initial Margin(IM)March/2017★apply（daily）
Middle★apply（daily）
Regional bank17

Current Collateral Management
As a response to the margin regulation, each bank establishes a collateral management
system and collateral negotiations with counterparties are individually handled.
Relevant systems

Collateral Management systems
Regulator

FX

Trades info
MtM/Greeks

Interest

Market rate

Collateral balance

CreditCollateral negotiation

Reporting

For External

Reporting

Regulatory
reporting

Reporting

For Internal

IM Calculator
Negotiation

E-mail notice

Counterparty
under CSA

Corrateral negotiation
CSA info

Calculation

CollateralManagement

Dispute Control

FinancialInstitutesSINFE

・Calculate IM/VM using parameters from relevant systems

Currently,
negotiations
arehandled bybyE-maile-mails and・Notice of collateralrequest tocounterparty
telephonewith counterparty,
input manually.
・Retrieve collateralamount calculatedandby counterparty
Reporting flow with Regulator has not been established.
・Data output for Internal/External reporting18

Future Collateral Management

AS IS

Future19

Introduction image(ASIS)

CollateralManagement
SystemCollateralManagement
System20

Introduction image(Future)

CollateralManagement
SystemCollateralManagementSystem21

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INFORMATION SERVICES INTERNATIONAL - DENTSU, LTD.
ALL RIGHTS RESERVED.

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