Smart Financial Instruments
Smart Financial Instrument System
Unique smart legal contract technology for both regulated and unregulated digital assets and their lifecycle automation.
Deon Digital technology is ideally suited for financial securities, OTC derivatives, insurance policies, and any contract of immaterial goods and assets. The entire process from issuance, security lifecycle, linkage to existing settlement systems, to finality and redemption is designed in CSL templates and code. The CSL maps out the terms and conditions of a security, i.e. the conditions of repayments of the financial obligations, whereas the transfer of money can remain in the existing settlement system. Moreover, CSL is analyzable and thus ideally suited for finance. The analysis and its conclusions are drawn from the exact same data that defines the contract and leaves no gap or misinterpretation between the contract and analysis. Because CSL contracts remain in the CSL notation throughout their lifecycle, the same tools and analyses that are available prior to the start of the contract are available throughout the duration.
Quick and easy digital asset creation
Create digital assets, fully automate issuance and admission to trading and settlement systems, offer unprecedented short time to markets and allow issuer to react effectively to fast-changing market conditions and investor needs.
Automate admission, registry and exchange listing
Automate end-to-end admission of digital assets, including the settlement account booking, public registry entries and exchange listings.
Fast and low risk trading and settlement
Integrate and orchestrate settlement and trading systems to enable massive efficiencies and risk reduction. Enable real-time delivery vs payment.
Lifecycle automation for digital asset
Manage the digital asset’s lifecycle events (payments, redemptions, knock-outs) and settlement accounts.
A smart financial instrument is a financial asset in pure digital form
The smart financial instrument has a lifecycle as a financial instrument contract, e.g. coupon payment (bonds), knock-outs (warrants), or dividend payments (equity), completely defined as a digital contract modelled in Deon’s Contract Specification Language (CSL). It also includes the legal documentation (final terms) and term-sheet (parameters) of the instrument. The SFI is also an asset represented in a resource accounting model or as tokens, e.g. Corda token.
Use smart legal contracts to comply with existing laws and regulations
The SFI fulfils the same function as a legal contract, as a contract is stating only who does what, when and under what conditions, but does not act on its own. A contract’s obligations are carried out outside the contract, either by direct human actions or by authorized automated systems. The same is true for an SFI.
High-end security by design protects money and assets
Unlike other blockchain smart contracts that are self-executing programs, the SFI technology is a protocol-type language that does not constitute the typical IT security risk associated with blockchains. The SFI contracts and resource transfers are atomically tied and thus, no loss of money, assets, or tokens is possible.
Build a complex SFI from several more simple structures
The SFI technology includes building blocks (coupon payments, early redemption, default events) that empower the user to quickly define a new instrument and its obligations.
Unleash the true power of data analytics
The SFI includes current remaining obligations, all past corporate actions, and initial instrument specifications. The SFI is analyzable since it defines the future cash-flows, redemptions, default events. as data and can be analysed, tested and simulated. The static reference data and the current state of the contract, its past and future events can be queried.
SFI easily integrated into legacy systems
Legacy systems or any other application can easily interact with the SFI using well-known and widespread technology patterns and skills. The CSL run-time software has an extensive set of tools to be integrated with existing software development environments such as the JVM environment. Any software that can make HTTP requests or call a Java API can integrate into Deon Digital’s contract management tools.
A distributed system that is ready to scale at large
The technology used in the SFI software inherently respects the nature and architecture of the capital and financial markets. . All resource transactions are independent, so no need for global consensus is necessary. The separation of execution of contracts from specification and the separation of resource settlement and contract management, with independent properties, enables highly scaled systems with high throughput. Moreover, the principle of separation of concerns from computer science is respected by separately having a service and technology concerned with contract management that is different from the resource management systems that perform transactions in money and assets.
Cloud-ready and interoperable to bridge CeFi and DeFi
The solution is future-ready and technology-agnostic: it can be deployed on a DLT as well as on a central database. The software tools such as sic enable the deployment and connection to standard software development tools and legacy solutions.