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DelphX to unveil new blockchain-supported alternative to CDS market

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DelphX Capital Markets is unveiling a new alternative trading system (ATS) and new securities products through its subsidiaries, DelphX Services Corp and Quantem Capital Corp, which are designed to provide a securities-based alternative to the single-name Credit Default Swap (CDS) derivatives market, at the upcoming Fixed Income Leaders’ Summit USA, convening in Boston on 6-8 June.

DelphX CEO, Larry Fondren, says: “Consistent with our sponsorship of the 2018 USA Summit, we will provide industry participants an exclusive under-the-hood preview of the DelphX ATS, which will launch this year. Attendees will also get a first look at our new Quantem securities available for issuance and trading within the ATS. Being one of the world’s largest gatherings of fixed income market leaders, the Summit is an ideal forum for unveiling our new market.”
 
Subject to necessary FINRA approval and SEC filings, the DelphX ATS will enable qualified institutional buyers to negotiate, purchase and trade new forms of securities that will be linked to referenced credit default risk and provide credit protection for underlying U.S. dollar denominated corporate, municipal and sovereign debt securities.
 
Fondren says: “We are very excited to introduce a regulated, technologically-advanced alternative to the USD3 trillion non-cleared CDS market, and are dedicated to streamlining securities transactions that diffuse default risk, enhance investor yield and promote fixed income liquidity. We believe the DelphX ATS effectively addresses the multiple issues that contribute to the ongoing decline of the single-name CDS market.”
 
The DelphX ATS will employ its trading technologies to enable participants to anonymously negotiate and trade the following new Quantem securities: 
 
Covered Put Option (CPO) securities that provide secured default protection for U.S. dollar-denominated corporate, municipal and sovereign securities, with each CPO strike-price equalling the par value of its underlying security; and Covered Reference Note (CRN) securities that allow investors to take on exposure to the default risk of a single underlying security or to participate in a pool of diverse risks that employs actuarial science to broadly diffuse the risk impact of credit events among all participants.
 
The DelphX ATS will maintain a proprietary Distributed Ledger for transparent and immutable post-trade reporting, verification, and record-keeping. All trades executed on the DelphX ATS will be maintained on the Ledger to enable real-time trade reporting and verification. Securities records on the Ledger will also be maintained in parallel with traditional book-entry records kept by the issuing and paying agent to provide additional post-trade efficiency, transparency and security. 

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