Despite the blockchain industry's push for instant settlement, some institutional capital markets experts question its practicality. Jorgen Ouaknine of Euroclear argues that for large institutions, liquidity efficiency and risk management are more critical than transaction speed. He suggests that automating corporate actions, such as processing dividends and interest distributions, offers more immediate benefits.
Ethan Buchman, co-founder of Cycles Protocol, highlights the importance of netting in maintaining liquidity. He warns that instant settlement could increase capital requirements by eliminating netting efficiencies. Buchman's startup aims to introduce netting to crypto markets, reducing the need for full prefunding of trades. Cycles Prime, their institutional product, offers multilateral netting without a central counterparty, targeting over-the-counter fixed income markets where the absence of clearing systems is most costly.
Instant Settlement Faces Skepticism in Capital Markets
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