96:. They describe the need for software that turns natural language contracts into algorithms – smart contracts – that can automate financial processes using blockchain technology. Financial contracts define exchanges of payments or cashflows that follow certain patterns; in fact 31 patterns cover most contracts. Underlying these contracts there must be a data dictionary that standardizes contract terms. In addition, the smart contracts need access to information representing the state of the world and which affects contractual obligations. This information would include variables such as market risk and counterparty risk factors held in online databases that are outside the blockchain (sometimes called "oracles").
103:'s definition of smart contracts dates back to 1994. However, it is highly relevant for blockchains or distributed ledgers and the concept of smart contracts. Brammertz and Mendelowitz argue in a 2019 paper that without standards, the chaos around data in banks today would proliferate on blockchains, because every contract could be written individually. They further argue that of the four conditions set by Szabo, blockchains will usually fulfill only one, namely observability.
159:
fundamental algorithmic contract type patterns. These incorporate the parts of the data dictionary that apply to a given contract type. Finally, the reference code in Java which calculates the cash flow obligations which are established by the contract so they can be accurately projected, analyzed and acknowledged by all parties over the life of the contract.
158:
ACTUS has been implemented as a set of royalty-free, open standards for representing financial contracts. The standards combine three elements. First, a concise data dictionary that defines the terms present in a particular type of financial contract. Second, a simple but complete taxonomy of the
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Providing an open standard for the data elements and algorithms of contracts provides consistency first within financial institutions and second when sharing data among organizations in the finance industry. This data may be used to consolidate the views of product lines within a firm, to manage
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The authors argue that the adoption of a standard for smart contracts and financial data would reduce the cost of operations for financial firms, provide a computational infrastructure for regulators, reduce regulatory reporting costs, and improve market transparency. Also, it would enable the
114:
These ideas led to the ACTUS proposal for a data standard alongside an algorithmic standard. Together, these can describe most financial instruments through 31 contract types or modular templates. The ACTUS Financial
Research Foundation and the ACTUS Users Association develop the structure to
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still might be captured in various ways in fields that might be labeled ‘nominal value,’ ‘current principal,’ ‘par value’ or ‘balance’. Standardization of data would improve internal bank operations, and offer the possibility of large-scale financial risk analytics by leveraging
28:, is an attempt to create a globally accepted set of definitions and a way of representing almost all financial contracts. Such standards are regarded as important for transaction processing,
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The idea of the standardized algorithmic representation of financial contracts, however, is independent of and predates blockchain technology and digital currencies. In fact, also
484:
709:
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76:. However, while these data warehouses physically integrate different sources of data, they do not conceptually unify them. For example, a single concept like
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implement the ideas. The also control the intellectual property and development approaches. Specifications are developed, maintained, and released on GitHub.
49:
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to a database run by the Office of
Financial Research, an arm of the US Treasury. ACTUS is being used to help define five asset classes (
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The difficulty of defining and analyzing financial data were described by Willi
Brammertz and his co-authors in a 2009 book,
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obligations between institutions, or to meet reporting obligations set by regulators. In addition, ACTUS can assist in the
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paper, “Modelling metadata in central banks”. This cites the issue of how financial institutions have tried to overcome
45:
33:
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175:(DeFi) using blockchain. For example, ACTUS contracts have been coded in the Marlowe smart contracts language.
661:"OFR Expands Its Financial Instrument Reference Database to Help Identify Inconsistencies in Financial Terms"
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172:
65:
41:
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2018 IEEE/ACM 5th
International Conference on Big Data Computing Applications and Technologies (BDCAT)
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Smart
Contracts, Distributed Ledgers, and the Need for an Algorithmic Financial Contract Standard
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510:"From digital currencies to digital finance: the case for a smart financial contract standard"
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344:"From digital currencies to digital finance: the case for a smart financial contract standard"
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Financial
Analysis and Risk Management: Data Governance, Analytics and Life Cycle Management
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146:(FIX) messaging standard, was added a year later. In 2023 ACTUS became a liaison member of
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142:) in the OFR's financial instrument reference database (FIRD). A third reference, the
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Data founation and analysis tools for the risk management of a financial institution
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44:(DeFi) using blockchain technology. ACTUS is used as a reference standard by the
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Kurt, Stockinger; Heitz, Jonas; Bundi, Nils; Breymann, Wolfgang (December 2018).
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685:"Financial Instrument Reference Database (FIRD) | Office of Financial Research"
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230:"Large-Scale Data-Driven Financial Risk Modeling Using Big Data Technology"
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485:"Nick Szabo -- Smart Contracts: Building Blocks for Digital Markets"
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In
October 2021, ACTUS was added as the second reference after
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415:] (in German). Zurich: Dissertation, University of Zurich.
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by directly quantifying the interconnectedness of firms.
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technology. Key to this is the idea of "contract types".
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318:"Smart Contracts Were Around Long Before Cryptocurrency"
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Unified
Financial Analysis: The missing links of finance
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Unified
Financial Analysis: The missing links of finance
277:"The Office on Financial Research and Operational Risk"
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https://www.ecb.europa.eu/pub/pdf/scpsps/ecbsp13.en.pdf
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Brammertz, Willi; Mendelowitz, Allan I. (2018-01-01).
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Brammertz, Willi; Mendelowitz, Allan I. (2019-04-01),
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Brammertz, Willi; Mendelowitz, Allan I. (2018-01-01).
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Brammertz, Willi (2010-01-01). Clacher, Iain (ed.).
64:. The simplicity of the problem is described in an
275:Brammertz, Willi (2013), Lemieux, Victoria (ed.),
167:of financial instruments, and the development of
88:The concepts were expanded upon by Brammertz and
36:of financial instruments, and the development of
283:, Berlin, Heidelberg: Springer, pp. 47–71,
710:"OFR'S Financial Instrument Reference Database"
708:Office of Financial Research (November 2022).
555:Journal of Financial Regulation and Compliance
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21:Algorithmic Contract Types Unified Standards
469:: CS1 maint: location missing publisher (
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446:(SSRN Scholarly Paper), Rochester, NY,
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407:Brammertz, Willi (December 13, 1991).
637:"ACTUS Financial Research Foundation"
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665:Office of Financial Research
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46:Office of Financial Research
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514:The Journal of Risk Finance
348:The Journal of Risk Finance
289:10.1007/978-3-642-32232-7_3
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754:FRF, ACTUS (2020-06-08).
689:www.financialresearch.gov
613:"Technical Specification"
567:10.1108/13581981011019624
192:Brammertz, Willi (2009).
527:10.1108/JRF-02-2017-0025
361:10.1108/JRF-02-2017-0025
244:10.1109/BDCAT.2018.00033
796:Cryptocurrency projects
94:Journal of Risk Finance
92:in a 2018 paper in the
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551:"Risk and regulation"
173:decentralized finance
48:(OFR), an arm of the
42:decentralized finance
452:10.2139/ssrn.3373187
238:. pp. 206–207.
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90:Allan I. Mendelowitz
756:"Marlowe and ACTUS"
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780:Categories
765:2024-05-15
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694:2023-07-05
670:2023-02-06
646:2023-06-30
622:2023-06-30
598:2023-02-06
494:2024-05-15
457:2024-05-15
393:2023-06-30
328:2023-06-30
304:2023-06-30
179:References
101:Nick Szabo
70:data silos
575:1358-1988
536:1526-5943
421:cite book
384:"Oracles"
370:1526-5943
196:. Wiley.
120:ISO 20022
465:citation
262:57764283
148:ISO TC68
136:warrants
124:equities
83:Big Data
731:"About"
150:/ SC9.
140:futures
132:options
56:History
641:GitHub
589:"Home"
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138:, and
760:ACTUS
735:ACTUS
713:(PDF)
617:ACTUS
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