Clearing Machines

Clearmatics is developing a new clearing and settlement platform for OTC financial markets, bringing together custodians, dealers, trading venues, buy-side firms and data providers onto a single platform.

Here members can settle securities trades and automate the valuation and margining of derivatives and other financial contracts using Decentralised Clearing Network (“DCN”) technology. The platform offers transparency, counterparty risk mitigation and settlement protocols that optimize collateral usage.

Built on a model of Turing-complete scripting, Clearmatics has the flexibility to design application protocols that both integrate existing intermediaries as well as alternative, smart-contract based disintermediations like bi-lateral delivery-versus-payment.

Clearmatics aims to make the DCN the new and open standard in financial clearing and settlement (two fully integrated processes on its model), eventually replacing the patchwork of proprietary custodial accounting systems such as SWIFT messaging. Clearmatics is based on the Ethereum Virtual Machine, specialized for financial and fiduciary computations, and it uses a new consensus protocol designed to achieve finality of settlement and eligibility as a Designated Settlement System.

But Clearmatics isn’t just about the efficiency and automation that DCN’s provide to existing markets. It’s the enabling aspect of making assets and financial contracts programmable. New derivatives specifications can be designed in programming code by end-users, and asset cash flows can be stripped, repackaged and traded using code instead of lawyers.

Permissionless innovation in the design of new derivatives contracts (an alternative to ISDA), and a streamlined process for the origination of new securities. The world today is comprised of dematerialized assets and what are effectively computable derivatives contracts. Clearmatics will enable the settlement of these to be controlled by distributed ledgers and code run on an industry standard, distributed virtual machine.