Slide 1

The Irregular Newsletter of Z/Yen Group Limited

Catch up with current projects, new ventures and see some very bad puns (Editor: bad metaphor) via Z/Yen's blog or the eagerly awaited newsletter.

To receive your copy electronically, email This email address is being protected from spambots. You need JavaScript enabled to view it.

The Impact and Potential of Blockchain on the Securities Transaction Lifecycle

There is considerable interest in the potential use of ‘blockchain’ in the settlement of securities transactions.  Proponents argue that the use of cryptographic security tools to create blockchains (sequential, digitally signed and validated records of ownership) can allow almost instantaneous post-trade delivery against payment (DVP), thus radically simplifying post-trade processing and substantially reducing both costs and operational and liquidity risks.  The SWIFT Institute has commissioned Professor Michael Mainelli & Professor Alistair Milne, Loughborough University School of Business and Economics, to examine the impact and potential of blockchains and mutual distributed ledgers on the lifecycle of securities transactions.

Our research is investigating three hypotheses.  First, that decentralisation can be achieved through other schemes more efficient than 'bitcoin mining'.  Second, that decentralisation will lead to substantial shifts in the functions and organisation of the post-trade landscape. Third, that the adoption of blockchain in securities settlement will require a co-ordinated and widespread change in operational processes, and will not be achievable through piecemeal efforts.  These three hypotheses are being explored using a combination of desk-based analysis, focus groups and structured interviews.  We held a workshop on 29 September examining “Mutual Distributed Ledgers versus The Blockchain”.  We intend to hold a second workshop in November.  We are also drawing upon active research at Long Finance, particularly Distributed Futures –  Our target for completion is February 2016.  We welcome interested parties contacting us for discussion - This email address is being protected from spambots. You need JavaScript enabled to view it..

InterChainZ On The Water

Z/Yen’s clients are becoming more and more involved in the world of mutual distributed ledgers, blockchains, cryptocurrencies, and other disruptive technologies in finance. We have been tracking much of this via Long Finance since 2005, e.g., and implementing various distributed ledgers since the mid-1990s, though it’s really since the 2009 launch of Bitcoin that things have sped up. The June launch of our consortium research project into the taxonomy and performance of distributed ledgers, InterChainZ, takes things to another level. We are building several types of distributed ledgers and testing them against four different financial ‘use cases’ in a project due to report at the end of September.  InterChainZ will be followed by IntereXchainZ, which is building a fully-functional generic exchange.

However, it is a consortium research project, and there is an important social side to the project. We thought it might be nice to host an informal social event for our research partners and those members of the Z/Yen community with an interest in the InterChainZ project. In his 1494 treatise, “Summa de Arithmetica et Geometrica, Proportioni et Proportionalita”, Fra Luca Pacioli (1445-1517), said, "The books should be closed every year, especially in a partnership, because frequent audit maintains friendship."

“I libri contabili dovrebbero venir chiusi ogni anno, specialmente in una società di persone poiché un controllo contabile frequente mantiene l'amicizia."

So mutual distributed ledgers being about friendship, on the balmy summer evening of Tuesday, 7 July, fifty of us took Thames Sailing Barge Lady Daphne for a spin, raising Tower Bridge twice during the evening. We also took the opportunity to make this the first outing of the “Distributed Futures" Group, a new forum designed to talk about all things ‘mutual’ in ledgers.  If you are interested in joining Distributed Futures please do contact us.

InterchainZ Wvent

From small acorns grow…

Z/Yen have been working with the Institute of Directors (IoD)and Cass Business School to launch a new Corporate Governance initiative which we hope will grow and flourish over time.  The objective was to develop and test different ways of measuring and reporting on corporate governance in UK listed companies.  From this we aim to encourage good governance amongst UK companies and also stimulate a public debate on the importance of corporate governance in rebuilding the reputation of the UK business community.

Our first challenge was to define corporate governance.  As the project chairman, Ken Olisa OBE, said about governance “It is hard to define because governance is all about behaviours; and behaviours, whether individual or collective – are hard to reduce to a coherent framework”.  We looked at a number of definitions, before choosing to use the UK Corporate Governance code as our definition.

We sought to measure corporate governance using different approaches.  We surveyed UK business professionals, including members of the IoD, ACCA and CISI, asking them to rate the governance of companies they were familiar with..  We also selected more than 50 instrumental factors, third party independent data points which the team assessed as having a relationship with corporate governance (the nature and direction of that relationship causing much debate).  Both these results are published in the report. 

Finally we built a predictive model using support vector machine regression to predict how survey respondents would have rated companies they were not familiar with.  This allowed us to build  a third set of results, combining the views of the survey respondents with the instrumental factors.    

Each approach gave different, yet reasonable results.  The predictive model approach shows that some companies suffer from a reputational disadvantage, i.e., their public reputation lowers their score from what the instrumental factors alone might suggest.  It is hard to measure the impact and appropriate scale of some instrumental factors – is it better to have two audit committee meetings or 22?  We need more understanding of how different factors, and different behaviours can be assessed. 

It seems clear that although all agree that developing a measure of governance would be valuable, there is no one simple approach we can use.  The report contains three different sets of results, grouping companies into tiers according to their results in the different approaches.  We are aware that more work needs to be done to build a shared understanding of how to measure governance.  Z/Yen and the IoD are looking forward to creating a meaningful and useful measurement approach.

Xueyi Jiang, our data lead on this project, chose a tree to illustrate the count of key words from the survey responses on the front page of the report.  It seems appropriate as an image for this complex project and the complex and growing organism that is corporate governance.  We are looking forward to continuing the debate and inviting your thoughts over the next few weeks and months.

The report is available for download hereIf you would like to contribute to the survey please go to  For more information please contact This email address is being protected from spambots. You need JavaScript enabled to view it..  




Security Forward Workshop & Dinner - 2 July 2015

Security Forward Risk and Intelligence Forum’s Summer meeting was held at the Z/Yen Group offices at 90 Basinghall Street in the City of London. There was a record turnout of over twenty people, although one founder Member, Novartis from Switzerland was unable to attend, as was our newest Member HSBC. The meeting started with a presentation from our guest speaker, Mark Wolsey, Global Security Operations Leader for PwC.  Having spent twenty five years in the Royal Marines, Mark moved into Corporate Security directing global security functions in Smiths Group, Cadbury and Phillip Morris International, before taking up his present appointment with PwC over three years ago.  Mark has operated extensively in emerging markets, fragile states and many extreme risk environments including Yemen, South Sudan, Iraq, Libya and Afghanistan. As well as giving internal advice to PwC’s own engagements in such environments, Mark is now offering advice to clients on the security procedures and protocols necessary for managing the risks and operating in such environments.  He has just been named as Practice Leader for Enterprise Security at PwC, where he is setting up the Global Centre of Excellence for Security. His presentation was entitled "Operating in High Risk Environments".  In a fascinating and informed presentation to members, some of whom were ex-colleagues, he pointed out that regional CEOs are not life-and-death decision-makers.  Nor are regional CEOs necessarily leaders in crises.  Mark described how risk appetites vary and the value of crisis leadership training.  He gave some case studies and talked us through what happened in each.  The question and answer session allowed Mark to go into more detail on some of his points and we were lucky enough to hear the views of the FCO and the MoD, as well as major international corporates and  academics which allowed for a very full discussion.

After our usual round-robin to identify ‘in tray’ issues and concerns, our ‘Speaker in Residence’, Lt Colonel Crispin Black MBE MPhil rose to challenge us. Crispin is an independent expert on terrorism, intelligence and security, as well as a novelist. Crispin’s pthy title, "A Limited Idea Of Fairness Lay Behind Both The Magna Carta And The US Constitution.  A More Comprehensive Idea Of Fairness Currently Dominates Political Discourse In The Western World.  Where Will It Lead Us?", truly said it all.  Having placed the entirety of his talk in the title, we were curious indeed to see what else he could add.  As usual, Crispin challenged the audience and explored various and wide ranging topics to make his point.  He used the example of Napoleon's Marshals and the social mobility that the French Revolution  allowed to flourish, pointing out that there is really no level playing field in life.  Whilst luck can sometimes actually be the result of good preparation, there is also a random element, pure chance, like being in the right place at the right time. Crispin contemplated the changing mores of religion and public thought.  Whereas Christianity was traditionally about resurrection and judgement, we have moved away from the harsher elements of that judgement. He contrasted the current world view with that of the Elizabethans and quoted the book "The Elizabethan World Picture" which gives us Shakespeare’s perspective and illustrates Elizabethan obsessions with order.  He also touched on changing views on sentiment as shown by the British public when Diana, Princess of Wales died, and also at Wootton Bassett when the funeral cars passed through.  It provoked a good discussion.

Following the meeting, we took our traditional cocktail at The Honourable Artillery Company, which provided a splendid venue for us.  The drink of honour was a French 75 (Soixante Quinze) commemorating the powerful French 75mm field gun.  Our dinner speaker was Major Gordon Corrigan, the distinguished military historian and author, returning for a second time with a second book.  He provided a very amusing but fact-filled talk on Waterloo, including many new insights.  After the dinner, copies of his latest book "Waterloo: A New History Of The Battle And Its Armies" were signed for all.

Future meetings are planned for 24 September, 8 December, 22 March 2016, and 29 June 2016.