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UBS Group led the launch of Ethereum compliance simplified platform Madrec

In the wake of the new regulatory requirements, some of the world's largest banks revealed a simplified compliance pilot program based on Ethereum.

Insiders described the project as a large-scale autonomously distributed settlement platform (Madrec) led by the Swiss banking giant UBS, with other players including Barclays, Credit Suisse, KBC, SIX and Tom Sun Reuters, it is learned that the purpose of this project is to make it easier for banks to reconcile the broad data of their rivals.

Traditionally, regulated companies use the "legal entity identifier" stored in the global data system to perform transactions on behalf of their clients, even if those customers do not have a single code. However, regulatory changes known as the MiFID II are expected to take effect on January 3, 2018 within the EU, and all eligible corporate entities will be required to own and use these codes.

In an interview with reporters, Peter Stephens, head of research and development at UBS's blockchain, explains how the blockchain infrastructure helps users save money without sacrificing their competitive edge.

Stephens said:

"This will be our first project on the go."

'Will not cause harm'

As part of its launch program, Stephens invited CoinDesk to visit UBS's lab to demonstrate Madrec's idea of ​​how the blockchain platform can ease regulatory requirements.

During the six-month construction period, the platform evolved into a smart-contract-driven network designed to integrate identifiers recognized by the Legal Entity Identifier Monitoring Committee (LEI ROC) and others. The reconciliation of LEI reference data, including industry classification and information from the European Securities and Markets Authority (ESMA).

Blockchain smart contracts will be able to guarantee accuracy in real time, compared to the independent checking of information by each company and the regular adjustment of results.

To do this, anonymous reference data is hashed to the Ethereum blockchain, and the source data itself is still inside the organization. Smart contracts then coordinate the data, allowing users to quickly identify anomalies and mediate them.

As every eligible entity will follow the same standards, Stephens believes helping each other ensure the accuracy of their work will only have a positive impact on each of them, leaving room for competition elsewhere.

He added: "This is a public reference data, not a competitor, this will not be an injury, but will make the world a better thing, which is good for regulators, we include data providers, We are not trying to subvert them, we also include other banks. "

Simulated field test

Initially, the project was internally called the Project Conrad, the main development point for this massively distributed self-healing settlement platform, which is the blockchain development lab in UBS, London.

Perhaps most notably, the site is also where UBS launched a public utility clearing currency project and the participants are also a group of financial institutions.

As for the Madrec pilot project, it is currently being tested in a simulated environment.

According to the plan, the pilot project will be completed before the end of next month, and then the project owner will release the next phase of the plan based on the results.

Lee Braine, chief technology officer at Barclays Investment Bank, told reporters:

"This precise application makes it easier to understand innovative cryptographic techniques that allow banks to retain their private data while maintaining their underlying data through collective consensus maintenance."