Introduction
Where does the contract come from and where does the depository come from:
Contracts
Some of the first written contracts are the Sumerian stone tablets. Contracts are legal agreements that specify the rights and obligations of the parties involved in a transaction, such as a sale, a lease, a loan, or a service. Contracts are one of the oldest forms of written communication, and the Sumerians were among the first civilizations to use writing to record their contracts https://www.bbc.com/news/business-39870485
The Sumerian stone tablets contain various types of contracts, such as:
• Sale contracts: These are contracts that document the transfer of ownership of goods or property from one party to another, in exchange for a certain price or value. For example, one tablet from the city of Ur records the sale of a house and a garden for 600 shekels of silver https://www.atlasobscura.com/articles/cuneiform-tablet-marriage-contract-infertility-surrogate-mother-assyrian
• Lease contracts: These are contracts that document the temporary use of goods or property by one party from another, in exchange for a certain rent or fee. For example, one tablet from the city of Nippur records the lease of a field for three years for 180 shekels of barley per year https://www.archaeology.org/issues/291-1803/trenches/6363-trenches-kanesh-mesopotamian-trade-networks
• Loan contracts: These are contracts that document the lending of money or goods by one party to another, in exchange for a certain interest or repayment. For example, one tablet from the city of Uruk records the loan of 10 shekels of silver for one year at 20% interest https://sites.middlebury.edu/middartmuseum/2021/07/06/neo-sumerian-record-keeping-a-cuneiform-tablet-fragment-from-a-mesopotamian-archive/
• Service contracts: These are contracts that document the provision of labor or skills by one party to another, in exchange for a certain wage or reward. For example, one tablet from the city of Lagash records the service of a carpenter who built a door for a temple for 10 shekels of silver https://rethinkq.adp.com/cuneiform-tablets-secrets-mesopotamian-payroll/
The Sumerian stone tablets also contain other types of legal documents, such as:
• Laws: These are rules or regulations that govern the behavior and conduct of the people in a society, and the consequences or penalties for violating them. For example, one tablet from the city of Ur contains the Code of Ur-Nammu, which is the oldest known law code in the world.
• Letters: These are messages or communications that convey information or requests from one party to another. For example, one tablet from the city of Kish contains a letter from a king to a governor, asking him to send troops and supplies for a military campaign.
• Administrative records: These are records or reports that document the activities or transactions of a government, an institution, or an organization. For example, one tablet from the city of Umma contains an administrative record of the distribution of barley rations to the workers of a temple.
We can say that the Sumerian contract system is one of the first in the world, as the Sumerians were among the earliest civilizations to use writing to record their contracts. The Sumerian language and script are among the oldest forms of written communication in human history, dating back to the 4th millennium BCE https://en.wikipedia.org/wiki/Sumer
The Sumerian contract system was based on the principle of reciprocity, which means that the parties to a contract had to exchange something of equal value, such as goods, services, or money. The contracts were usually written on clay tablets, using the cuneiform script, which consisted of wedge-shaped signs impressed on the clay with a stylus. The contracts contained the names of the parties, the terms of the agreement, the witnesses, and the date. The contracts were often sealed with the impressions of the parties’ fingers or cylinder seals, which were engraved stones that could produce a distinctive mark on the clay https://www.bbc.com/news/business-39870485
Depositories
CSDs, or central securities depositories, are institutions that hold and transfer financial instruments, such as securities, bonds, or mutual funds, through electronic records. CSDs play a vital role in the post-trade process, as they enable the settlement of transactions, the safekeeping of assets, and the maintenance of ownership records https://www.csds.in/history.
CSDs emerged in the 1960s as a response to the rapid growth of trading volumes in the securities markets, which created operational challenges and risks for the settlement systems. The traditional method of settlement, which involved the physical delivery and exchange of paper certificates, became inefficient, costly, and prone to errors, fraud, and theft. To overcome these problems, CSDs were established to immobilize or dematerialize the securities, that is, to replace the paper certificates with electronic records that could be easily transferred and verified https://finance.ec.europa.eu/capital-markets-union-and-financial-markets/financial-markets/post-trade-services/central-securities-depositories-csds_en https://ecsda.eu/faq.
The first CSDs were created in the United States and Europe, such as the Depository Trust Company (DTC) in New York in 1973, and the Euroclear System in Brussels in 1968. These CSDs initially focused on the domestic markets, but soon expanded their services and networks to cover the cross-border and international markets. For example, the International Central Securities Depositories (ICSDs), such as Euroclear and Clearstream, were established to facilitate the settlement of eurobonds, which are bonds issued in a different currency from that of the country where they are issued https://finance.ec.europa.eu/capital-markets-union-and-financial-markets/financial-markets/post-trade-services/central-securities-depositories-csds_en https://ecsda.eu/faq.
Since then, CSDs have evolved and diversified their functions and products, in response to the changing needs and demands of the market participants and the regulators. CSDs have adopted new technologies, such as blockchain and cloud computing, to enhance their efficiency, security, and interoperability. CSDs have also developed new services, such as collateral management, corporate actions, and securities lending, to add value and convenience to their customers. CSDs have also harmonized their rules and standards, such as the CSD Regulation (CSDR) in the European Union, to improve their integration and cooperation https://finance.ec.europa.eu/capital-markets-union-and-financial-markets/financial-markets/post-trade-services/central-securities-depositories-csds_en https://ecsda.eu/faq https://public.ccsds.org/about/history.aspx
Today, there are over 100 CSDs operating in different regions and jurisdictions around the world, providing essential infrastructure and services for the global financial system. CSDs are regulated and supervised by the relevant authorities, and are subject to various principles and guidelines, such as the Principles for Financial Market Infrastructures (PFMIs) issued by the Committee on Payment and Settlement Systems (CPSS) and the International Organization of Securities Commissions (IOSCO) https://finance.ec.europa.eu/capital-markets-union-and-financial-markets/financial-markets/post-trade-services/central-securities-depositories-csds_en https://ecsda.eu/faq.
Benefits with DaDepo
Civil law contracts are legal agreements that regulate the civil rights and obligations of the parties, such as contracts of sale, lease, loan, or service. https://www.americanbar.org/groups/business_law/resources/business-law-today/2020-january/common-law-drafting-in-civil-law-jurisdictions/.
Depositories are platforms or networks that enable the registration, transfer, and settlement of financial instruments, such as securities, bonds, or mutual funds, through electronic records https://ppp.worldbank.org/public-private-partnership/legislation-regulation/framework-assessment/legal-systems/common-vs-civil-law.
If the ownership rights of civil law contracts were registered in depositories as financial instruments, the owners of such rights could receive the following benefits:
• Enhanced liquidity: The owners could sell or buy the contracts more easily and quickly through the depository, without the need for physical delivery or complex formalities. This could increase the marketability and value of the contracts https://link.springer.com/chapter/10.1007/978-3-030-90513-2_16.
• Reduced risk: The owners could reduce the risk of loss, theft, or fraud of the contracts, as the depository would provide a safe and reliable custody and verification of the contracts. The owners could also benefit from the protection and compensation mechanisms of the depository in case of default or insolvency of the other party or the intermediary https://link.springer.com/chapter/10.1007/978-3-030-90513-2_16.
• Lower cost: The owners could save on the cost of administration, documentation, and taxation of the contracts, as the depository would simplify and standardize the procedures and requirements for the registration and transfer of the contracts. The owners could also enjoy lower fees and commissions from the depository and the intermediary https://link.springer.com/chapter/10.1007/978-3-030-90513-2_16.
In terms of releasing their capital, pledging, and borrowing, the owners of civil law contracts in depositories could have the following implications:
• Releasing capital: The owners could free up their capital by selling their contracts to other investors or institutions, who may be willing to pay a higher price for the contracts due to their enhanced liquidity, security, and efficiency. The owners could then use the proceeds to invest in other assets or opportunities https://www.investopedia.com/terms/p/pledging-requirement.asp
• Pledging: The owners could use their contracts as collateral or security for other transactions, such as loans or securitization. This could allow them to obtain financing or credit from banks or other lenders, who may be more willing to lend to them due to the reduced risk and cost of the contracts. The owners could then use the funds to finance their business or personal needs https://www.icmagroup.org/market-practice-and-regulatory-policy/repo-and-collateral-markets/icma-ercc-publications/frequently-asked-questions-on-repo/13-what-is-the-difference-between-repo-and-securities-lending/
• Borrowing: The owners could borrow money or goods from other parties, using their contracts as a source of repayment or interest. This could allow them to access liquidity or resources that they may not have otherwise, or to take advantage of arbitrage or hedging opportunities. The owners could then use the borrowed money or goods to enhance their income or wealth https://www.tamimi.com/law-update-articles/pledging-of-shares-of-a-limited-liability-company-facts-or-fiction/
Science
A possible scientific argument about civil law contract possible depository systems could be:
• Premise: Civil law contracts are valuable and transferable assets that can be used as collateral or security for other transactions, such as loans or securitization.
• Claim: Civil law contracts can benefit from being registered in a depository system as a financial instrument, as it can enhance their liquidity, security, and efficiency.
• Proof: Registering civil law contracts in a depository system can provide the following advantages https://www.jstor.org/stable/24585871 :
• It can reduce the transaction costs and risks associated with the physical delivery or verification of the contracts, as the depository system can provide a safe and reliable custody and validation of the contracts.
• It can increase the marketability and value of the contracts, as the depository system can facilitate the transfer and settlement of the contracts between different parties, as well as provide access to other financial services, such as loans or credit.
• It can simplify and standardize the procedures and requirements for the registration and transfer of the contracts, as the depository system can harmonize the legal and regulatory frameworks of different jurisdictions.
A scientific argument regarding civil law contract depository systems can focus on several aspects that highlight the advantages and potential improvements in these systems, considering their technological, legal, and societal implications. Here are key points to consider in such an argument:
- Data Security and Privacy: Scientific advancements in encryption, blockchain technology, and cryptographic techniques can bolster the security of contract depositories. These technologies can ensure data integrity, prevent unauthorized access, and protect sensitive information, thereby enhancing the trustworthiness of the system.
- Smart Contracts and Automation: Scientific research and development in smart contract technology can revolutionize civil law contracts. Automating contract execution through self-executing codes embedded in smart contracts can significantly reduce the need for intermediaries, enhance transparency, and ensure adherence to contract terms.
- Interoperability and Standardization: Scientific efforts towards establishing interoperability and standardization among different contract depository systems can streamline operations and facilitate seamless interaction between various platforms. Developing common protocols and frameworks can improve compatibility and data exchange between disparate systems.
- Legal Compliance and Regulatory Frameworks: Research focusing on the integration of legal compliance within contract depositories is crucial. Understanding and implementing legal and regulatory requirements across jurisdictions, while considering evolving laws, is essential for the system’s legitimacy and global acceptance.
- User Experience and Accessibility: Scientific studies on user interfaces, accessibility features, and user experience design can enhance the usability of contract depository systems. Ensuring intuitive navigation, multilingual support, and user-friendly interfaces can encourage broader adoption and usage.
- Artificial Intelligence (AI) and Machine Learning (ML): Incorporating AI and ML algorithms into contract depositories can enable predictive analytics, risk assessment, and fraud detection. These technologies can analyze contract patterns, identify potential risks, and provide insights for better decision-making.
- Ethical and Social Implications: Scientific research can address ethical considerations, such as fairness, transparency, and accountability in contract depository systems. Studies on the societal impact of these systems in promoting fairness, reducing legal disparities, and fostering trust among diverse communities are crucial.
- Scalability and Resilience: Scientific advancements focusing on scalability and resilience can ensure that contract depository systems can handle large volumes of data and remain operational even under adverse conditions, such as network disruptions or cyberattacks.
In summary, a scientific argument concerning civil law contract depository systems involves ongoing research and innovation in various domains, including cybersecurity, legal-tech, blockchain, AI, user experience, and ethical considerations. Emphasizing the importance of continuous scientific advancements in these areas can contribute significantly to the development and improvement of robust, secure, and efficient contract depository systems.
Without DaDepo
An economic system where civil law contracts cannot be registered in depositories, these contracts cannot be traded globally, and the owners of these contracts cannot exchange the value of the contract for capital, would be a system that is:
• Highly formalistic: The system would rely on the physical delivery and exchange of paper contracts, which would require complex and costly formalities, such as notarization, authentication, and taxation. The system would also impose strict and rigid rules and requirements for the validity and enforceability of the contracts, such as the form, the content, and the consent of the parties https://academic.oup.com/book/41122/chapter/350438870.
• Lowly efficient: The system would face operational challenges and risks for the settlement of the contracts, such as delays, errors, fraud, and theft. The system would also have limited access and availability of the contracts, as they would be stored and managed by the parties themselves or by intermediaries, such as lawyers or agents https://academic.oup.com/book/41122/chapter/350438870.
• Poorly integrated: The system would have difficulties in facilitating the cross-border and international transactions of the contracts, as they would be subject to different legal and regulatory frameworks of different jurisdictions. The system would also have low market confidence and trust in the contracts, as they would lack transparency and standardization https://academic.oup.com/book/41122/chapter/350438870.
The owners of civil law contracts in such a system would retain their rights to the extent that they can:
• Prove their ownership and possession of the contracts, by presenting the original or certified copies of the paper contracts, and by verifying the signatures and seals of the parties and the witnesses.
• Enforce their rights and obligations under the contracts, by resorting to the courts or arbitration, and by following the applicable laws and procedures of the relevant jurisdiction.
• Modify or terminate their rights and obligations under the contracts, by mutual agreement of the parties, or by the occurrence of certain events, such as performance, breach, or impossibility.
However, the owners of civil law contracts in such a system would also face some limitations and disadvantages, such as:
• They could not sell or buy the contracts easily and quickly, as they would have to find suitable buyers or sellers and comply with the formalities and costs of the transfer.
• They could not use the contracts as collateral or security for other transactions, such as loans or securitization, as they would have to obtain the consent of the other party or the intermediary, and to register the pledge or assignment with the authorities.
• They could not borrow money or goods using the contracts as a source of repayment or interest, as they would have to find willing lenders or suppliers, and to negotiate the terms and conditions of the loan or supply.
DaDepo connection to the global financial market infrastructures (FMI).
Some examples are:
• SWIFT: A global cooperative that provides secure and standardized messaging services for financial transactions. SWIFT connects over 11,000 financial institutions and corporations in more than 200 countries and territories https://ecommpay.com/products/payment-methods/payment-systems-in-asia/.
• T2S: A platform that enables the settlement of securities transactions in central bank money across Europe. T2S harmonizes the settlement rules and procedures of 20 European central securities depositories (CSDs) and four central banks https://payneteasy.com/blog/about-international-payment-systems.
• T2: A real-time gross settlement (RTGS) system that processes large-value and urgent euro payments between banks in the European Union. T2 is operated by the Eurosystem, which consists of the European Central Bank and the national central banks of the euro area https://wise.com/us/blog/global-payment-processing.
• CDLux: A CSD that provides post-trade services for securities issued in Luxembourg and other jurisdictions. CDLux is a subsidiary of Clearstream, which is part of the Deutsche Börse Group https://www.statista.com/statistics/1296193/asia-top-digital-payment-platforms-by-country/.
If a depository operates in Asia, Indochina, Oceania, South Australia, and Arabia, it may need to connect to other international payment systems that are more prevalent or relevant in those regions.
• CIPS: A payment system that facilitates the clearing and settlement of cross-border renminbi (RMB) payments. CIPS connects over 900 direct and indirect participants from 96 countries and regions, and supports the internationalization of the Chinese currency https://www.freecodecamp.org/news/rabbitmq-9e8f78194993/.
• FAST: A payment system that enables instant and low-cost domestic transfers in Singapore dollars. FAST connects 23 banks and 7 non-bank financial institutions and supports various payment services, such as PayNow, which allows peer-to-peer and business-to-consumer transfers using mobile numbers or national identification numbers https://6sense.com/tech/queueing-messaging-and-background-processing/rabbitmq-market-share.
• NPP: A payment system that enables fast, flexible, and data-rich domestic transfers in Australian dollars. NPP connects over 90 financial institutions and supports various payment services, such as Osko, which allows peer-to-peer and business-to-consumer transfers using mobile numbers, email addresses, or Australian Business Numbers https://nurkiewicz.com/2022/10/rabbitmq.htm l.
• GCC-RTGS: A payment system that enables real-time and secure domestic and cross-border transfers in Gulf Cooperation Council (GCC) currencies and US dollars. GCC-RTGS connects six central banks and 138 banks in the GCC region, which comprises Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates https://www.erlang-solutions.com/blog/rabbitmq-an-amazing-message-broker/.
To operate FMI networks, DaDepo must apply for licenses in the relevant jurisdictions,
technologies and jurisdictions are interconnected.
A message broker is software that mediates the exchange of messages between applications or components in a distributed system. A message broker decouples the communication logic from the business logic and provides various benefits, such as scalability, reliability, and interoperability.
Example of messaging protocols:
RabbitMQ is a popular and open-source message broker that implements the Advanced Message Queuing Protocol (AMQP). RabbitMQ supports multiple messaging patterns, such as publish/subscribe, request/reply, and push/pull, and can be integrated with various platforms and languages, such as Java, Python, and . NET.
According to one source, RabbitMQ has a market share of 29.71% in the queueing, messaging, and background processing category, and has over 22,000 customers worldwide. The top three geographies of RabbitMQ are the United States (45.12%), the United Kingdom (10.28%), and India (9.62%). Therefore, it is likely that RabbitMQ is also used in some countries in Asia, Indochina, Oceania, South Australia, and Arabia, but the exact number and distribution of customers in those regions are not readily available.
The previously mentioned territories are covered by IBM technology. IBM and RabbitMQ are both providers of message brokers, which are software applications that facilitate the exchange of messages between different systems or components. However, they do not have identical infosystems, as they have different products, features, and architectures https://stackshare.io/stackups/ibm-mq-vs-rabbitmq https://cloudinfrastructureservices.co.uk/best-rabbitmq-alternatives-message-brokers/ https://www.ibm.com/products/messages-for-rabbitmq.
IBM offers a product called IBM MQ, which is a robust and scalable message broker that supports various messaging protocols, such as MQTT, JMS, and AMQP. IBM MQ is based on the client-server model, where messages are sent from a client application to a queue manager, which then delivers the messages to the intended recipients. IBM MQ also provides a range of enterprise features, such as message encryption, content-based routing, and distributed transactions https://stackshare.io/stackups/ibm-mq-vs-rabbitmq https://cloudinfrastructureservices.co.uk/best-rabbitmq-alternatives-message-brokers/.
Leave a Reply