The AI Book by unknow

Author:unknow
Language: eng
Format: epub
ISBN: 9781119551928
Publisher: Wiley
Published: 2020-03-23T18:00:00+00:00

“Tech” is full of jargon but safe to say that “blockchain” provides us the necessary infrastructure and AI the ability to manage the block once created. The ETF becomes the centralized clearing agent for all of its investors and trades within the ETF, allowing instantaneous transparent straight-through processing (STP) and DvP, investors still benefiting from novation, fully dematerialized fungible assets and economies of scale (as with current ETFs), but now investor trades are matched inside the ETF, not simply pooled and traded outside on the market. It would make the investors within an ETF a complex adaptive community, trading as a block with other blocks and the rest of the market. Meanwhile ETF 2.0 would communicate continuously with other ETFs, exchanges and trading platforms to ensure correct real-time pricing.

Everyone shares the success of the ETF, assets and returns, weighted to their individual pathway and maturity. Workers become their own capital owners built on the principles of mutuality. The ETF provider deducts one disclosed cost to administer the algorithm, the trades and investors. While this may feel quasi-ponzi to some, this is no fugazi. The quandary left behind by Bernie Madoff (other than his conceit, deceit and fraudulent behaviour) was that the biggest failing of any ponzi is the incorrect estimation of cash flow and matching of assets over time. Eventually they run out of cash. The concept of cash-matching individual investors is itself well supported by liability-driven investing. The technology to match thousands of individuals has been beyond us, until now.

A rapid reduction in friction? Once an ETF is repurposed for individual pathways, rather than aggregated pooled outcomes, then assets are coded for cost, time and risk-matched to investors who need them. ETF 2.0 can trade internally, frictionless through blockchain technology, within the ETF and then only traded externally with the market when in net surplus of cash or assets. In effect we can create mega-blocks of investors, providing efficiencies in turnover costs and accurate investor-matched, risk-targeted allocations. This redesign of mutual investing would require a complete rethink in how asset management is structured today, including advisers, fund managers, fund investors, custodians, exchanges and clearing houses.

Suddenly, passive becomes social, benchmarks become meaningless, replaced by block economies. Each worker can view their own pathway to maturity in augmented reality from the comfort of their own home or on the move. Effectively, we would create a different pooled model and we haven’t even begun to think about quantum computing and isotopic algorithms and a hundred other cool bits of jargon that few of us properly comprehend. Science fiction is rapidly becoming a near-term indication of science fact; the lines are blurring.

To some “ETF 2.0” may sound like the onset of techno-Marxism on asset management; for others it is salvation. I explore the concept in detail in my FINTECH Circle Institute lecture and invite ETF innovators and coders to come together to create ETF 2.0 mega-blocks.

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