Dynamic Speculation

The technology, transparency and low cost of DelphX® enable all participants to dynamically speculate on the future pricing of protection for any referenced issue.

The net result is tighter spreads and deeper liquidity.

Blockchain-Powered Interaction

Speculators play a key role in efficient markets by providing on-demand liquidity and more stable pricing. Without speculators, fewer entities would participate—resulting in fewer transactions, wider bid/ask spreads, more volatile pricing and the potential inability to find a counterparty for a desired trade.

The blockchain technology employed in the primary and secondary markets of DelphX facilitates both active and opportunistic speculation. Through dynamic and informed competition, DelphX participants can profit from even modest increases and decreases in the market pricing of protection for any referenced issue.

Participants can negotiate speculative secondary trades of Default Compensation Receipts™ (DCRs), Collateralized Reference Obligations™ (CROs) and the referenced cash bonds, and also negotiate speculative purchases of bespoke new DCRs and CROs they intend to sell in the DelphX secondary market.

 

Sentinl™ Tracking

Employing blockchain-powered Sentinl functionality, participants can dynamically monitor and respond to all pending orders in the primary and secondary markets of DelphX, by:

  • Creating digital profiles of scenarios and conditions that meet their potential transaction interests
  • Receiving immediate Sentinl Alerts as orders that meet their specified scenarios and conditions are detected in the DelphX market
  • Setting parameters upon which executable contra-orders will be automatically created in their blotter for manual or automatic entry and execution of detected orders.      

Through this continuous search/report/respond process, every order entered or revised by another party triggers an immediate series of actions that optimize the participant’s ability to speculate on even the subtlest of price movements within DelphX.

 

Synergistic Interaction

The dynamic operation of Sentinl also causes a synergistic series of nearly immediate events to occur upon the entry or adjustment of every order on DelphX. For example, the entry of a single buy order for a DCR referencing CUSIP A will cause the following events to simultaneously occur:

  1. A corresponding sell order for the CRO linked to the pending DCR will be automatically created and posted to the CRO order book for CUSIP A
  2. All participants with Sentinl profiles containing interests in new CRO orders, pending orders relating to CUSIP A (or its sector, etc.), price movements of a certain percentage, and other applicable trading interests, will immediately receive executable Sentinl alerts
  3. Participants receiving these alerts can then manually or automatically:
    • Elect to pool or retain the DCR risk embedded in the newly offered CRO
    • Execute the sell order at the offered coupon (DCR spread) and purchase price resulting from its risk election
    • Enter a new buy order for the offered CRO at an alternative coupon amount (which will, in turn, trigger its own viral series of interactions)
    • Enter a latent buy order that is automatically posted in the future if its specified posting requirements are met within the time specified by the participant.

A Better Bond Market

DelphX_Whitepaper_thumb.jpg Default risk is too concentrated. The market is nontransparent. Too few issues can be protected. DelphX addresses these problems, providing guaranteed credit protection, deeper market liquidity and enhanced investor yields.

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