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SEI BLOCKCHAIN INTRODUCTION

October 2018

History of Synechron Blockchain COE Our growth has shadowed the remarkable progress of the technology

2

Start COE

3mth accelerator sprint – 6 POCs

1st client project

Commence JPM

Partner with R3

EEA member

30+ client projects

Quorum Open Source

Corda Open Source

Corda v1.0

Fabric v1.0

Digital Asset Holdings

Crypto / ICO boom

2007 2013 2016 2017

Bitcoin Ethereum

Release Quorum

Maker

R3

Key Highlights

• Majority of projects led out of NY

• Team has grown 100% organically by identifying and developing internal talent

• Strength across the 3 major open-source platforms – Ethereum/Quorum, Corda, Fabric

• Daily interaction and feedback loop with platform engineers at Quorum and R3 Corda

• Separate teams for Ethereum/Quorum, Fabric and Corda platforms due to unique technical skillsets required

• Over 20 banks, asset managers, data providers involved in our projects thus far

• We have entered Phase 2 development in 3 POC’s

• QuorumMaker open-source contribution : https://github.com/synechron-finlabs/quorum-maker

Emergence of Blockchain

Growth of the Synechron COE

News Release of 6 Accelerators • http://www.nasdaq.com/article/synechrons-accelerator-program-looks-to-speed-real-life-

blockchain-deployment-in-financial-services-cm683384

R3, Synechron and 39 banks delivering a Corporate KYC Utility • https://www.r3.com/news/39-firms-complete-global-trial-of-kyc-on-corda-blockchain-platform/

Synechron open source QuorumMaker contribution • https://www.financemagnates.com/cryptocurrency/innovation/synechron-releases-quorum-

maker-enterprise-ethereum-alliance/

J.P. Morgan $150m Debt Issuance with NBC, PIMCO, GSAM, WAMCO, Pfizer • https://www.nbc.ca/en/about-us/news/news-room/press-releases/2018/20180420-National-Bank-

of-Canada-JP-Morgan-test-blockchain-with-debt-issuance.html

IHS Markit tokenizing $1trn in syndicated loans • https://www.coindesk.com/ihs-markit-plan-tokenize-1-trillion-syndicated-loan-market/

2018 $150m debt

issuance 39 bank KYC consortium

Sample of Blockchain Engagements Platform agnostic, industry-leading partners with client engagements across range of use cases, technologies and industries

Dun & Bradstreet Data Oracle

Mapped 6,500 DUNS ID numbers onto blockchain in a pilot, and built a data Oracle integrating that data into our Trade Finance Accelerator

IHS Markit Syndicated Loans

Developing an application that addresses operational issues in order to process syndicated loans, specifically events & cash.

European ICO with mainstream firm

Asset-backed coin issuance on public Ethereum scheduled for Q2 2019

J.P. Morgan Debt Issuance

Development of debt issuance Dapp piloted on a $150m Yankee certificate issuance with National Bank of Canada. Asset Managers: GSAM, Pfizer, WAMCO, PIMCO.

R3 39 Bank KYC Consortium

Self-sovereign Know your Customer (KYC) Utility including 39 member banks across 4 continents.

Large Global Insurer parametric

Building a Trade Finance blockchain ecosystem for parametric insurance execution for cargo transfers integrating blockchain and IoT.

J.P. Morgan Payments

Interbank Information Network (IIN) UI and Mobile App Development for correspondent banking network – announced SIBOS 2017

Large Custodian Disaster Recovery

Disaster Recovery and Market resiliency custom use case for the financial industry.

A Large Global Bank and Asset Manager

Real-time interbank cash transfers and net settlement

SEI Repurchase Agreements

Consulting and Training related to building Blockchain COE and development of a Repurchase Agreements Use Case.

Citi Alternative Assets Tokens

Wealth management tokenization of assets video and clickable proto-type

3

UAE KYC Utility

National Self-Sovereign KYC Utility working with Corporates, Banks, Data Providers and local regulators

What problem does it solve? Protocols that enable counterparties that don’t trust each other to agree and act upon a shared set of facts.

4

Buyer

Action

Perception

Processing

Communication

Bank

Action

Communication

Buyer

Action

Perception

Processing

Bank

Action

Internet

Buyer

Action

Bank

Action

Shared Perception=Truth Perception

Processing Processing

Perception

Shared Processing Logic

Shared communication

Before the Internet Now After Shared ledgers

“I see what you see and I know what you know”

DLT, Blockchain & Cryptocurrencies Terminology is often used interchangeably, however there are key distinctions to be made

5

Distributed Ledger Technology (DLT) + Consensus of replicated data across multiple sites

+ Decentralized + Immutable + Trustless

Blockchain + Chronological chain of blocks/transactions

+ Cryptographic hash linking

Public Blockchains + Miners

+ Cryptocurrency + Permissionless + Open Source

+ Lightweight / downloaded on local computer

+ Most new ICO’s operate off Ethereum

Centralized ledger

Single entity has control

Distributed Database

Trusted entities share view of

data

All DLT platforms feature a set of design trade-offs

Privacy

Scalability / Speed

Trust, Interoperability, Light Infrastructure, Functionality

The evolution of blockchain trends and technology evolution Compute power, breakthroughs in cryptography & new design innovations are evolving the blockchain landscape

6

Corda

Built ground up for FS

Point to point

$107m equity from 40 banks

Distributed ledger + Immutable = decentralization POW solved decentralized consensus whilst avoiding Sybil attacks (fake identities) and Byzantine faults. Right timing – mid financial crisis + computing power

Shared business logic = business applications

Set rules tied to a transaction, not at entire DB or App level

Quorum

Private fork of Ethereum

Pure decentralization

JPM and EEA-led

Fabric

IBM-backed

Uses Channels privacy

Hyperledger open-source

2008 2013 2016 2019 2018

Digital Assets

Perception as a solution for incumbents

New DAML language

Aus Stock Exchange

Symbiont

Channels model

Primary project is Ipreo/Synaps syndicated loans

Axoni

Ethereum variant

Will be open-sourced in late 2018

Proprietary Open Source

Ethereum upgrades

Remove mining for Proof-of-Stake

Plasma channels

Raiden

Stellar

IBM public blockchain optimized for tokens

Lumens crypto

Institutional credibility

EOS

Next generation of blockchain

$4bn ICO

3,700 TPS

Return to public for disruptive innovation?

Alternative business models

Solve operational costs in banking

Decentralize currency

Decentralize economies

The trend The technology Next-Gen Public Public

Capital Markets A trustless technology and tokenization collapses a multi-staged investment process into single

click

7

1. Issuer Offer

2. Dutch Auction

3. Execution

4. Issuance

6. Secondary trade

Digital Asset Token Features

• Fractionalization • P2P transfer • Trustless best

execution • T+0 transfer • System of record

7. Corporate Actions

9. Maturity

5. Settlements

10. Extinguish

Asset classes • Debt • Equity • New ICO’s (usage rights,

crowd-investing) • Hybrids • Alternative Assets (e.g.

real estate)

Tokens collapse the investment process by combining asset and execution of terms into one swiftly transferable unit.

Intermediaries exist today due to trust issues.

The primary challenge for tokenization is delivering DVP.

8. Interest

Impact on the sector

• Improved liquidity • Reach smaller/retail

investors • Reduced intermediaries • Distributed SoR • Wallets replace custody

Investment Lifecycle

# Why blockchain for Capital Markets?

1 P2P Settlements on an immutable system of record via digital tokens that represent title to an asset

2 P2P exchange of offer and bids and trustless Dutch auction – no trust in a central record-keeper for single real-time view of records

3 Self-executing business logic via digital tokens

4 Automated pre- and post-trade compliance in shared business logic – you know your counterparty is compliant

5 Native and trustless IBOR + EMS + OMS + PMS all in one….. A Platform Play

ICO and Crypto-Capital Markets

8

1. Unlock capital

2. Alpha opportunities

3. Buyers

4. Platform to reach them

5. Low barriers to entry

Public

6. Operational cost reductions

Private

$250bn of new capital (peak $750bn)

75% of Bitcoins are held in long-term positions

Preventative compliance to mandates and whitelists

Thousands of coins and 80% of ICO’s on Ethereum

No existing token economy, though interoperability is available

Illiquid and volatile = inefficiently priced, wide spreads

Low cost to transact and self-executing rules disintermediate

Open source and low cost to download (need a laptop)

Remain as banks being gateways to financial system

Robust and compliant KYC and Identity mechanisms

Censorship resistant

Tokenizing title to illiquid assets / alternative assets

Access to 10m+ potential counterparties with unique ID’s

Same products as today

Leverage existing capital pools, investors and channels

Information asymmetry and light regulation leads to scams Issue loyalty token to reward clients for using digital channel

Mix of accredited un-accred investors, what is the future of reg & identity?

Creates new compliance issues

Crypto-economics removes risk of bad actors in programmable code

Anyone can download on laptop, acquire initial token via gateway

Interact with network via centralized exchanges

License fees

Duplication of infrastructure, complexity of integration to legacy tech

Banks will gradually gravitate to a winner

Possible adoption issues, limited AM presence at the moment

Lower compliance and legal barriers

Tokenization allows for self-executing business logic / transparency and accuracy

Capital Markets Needs

Tokenization allows for self-executing business logic / transparency and accuracy

40x devs on Ethereum. Roadmap may fail & new blockchains emerge

Alternative Asset-Backed Coins

9

INVESTOR PROBLEM #1

Passive mgmt. growth is due to reduced information asymmetry.

Alternative assets are by nature less efficiently priced, providing opportunities for active managers.

Alternative assets allocation has doubled in last 8yrs to 24% of global pension holdings

INVESTOR PROBLEM #2

Accredited investor rules have made individual investors in alternative asset funds challenging.

Indirect financial scale limitations also excludes access to retail.

Today retail is over-weighted to public equities and bonds.

0

20

40

60

80

100

Equity and Bonds Alternatives

RetirementAccount

Pension Funds

365M People

897M People

3.5B People

USD21.9 Trillion

USD41.6T

157,200

6.1 T

Ultra High Net Worth US 30M+

High Net Worth US 1.0M to 30M Mass Affluent US 100,000 to 1.0M

Wealthy Retail US 10,000 to 100,000

Low Wealth Retail <US10,000

29.1 T

USD103.9 T

16.4M

68% of wealth 99% of investors

Global Wealth Distribution 2016 Source: Credit Suisse Global Wealth Databook

2016 Portfolio Allocation Comparison Willis Towers Watson Global Pension Assets Study 2017

Corporate KYC Utility for the UAE Moving beyond a prototype

10

Citi are the most global corporate bank and would be willing partners in an Egypt initiative including interoperability of KYC profiles from the UAE.

Participants

• Citi Ventures

• Citi

• Multiple Corporates

• Multiple data service providers (D&B, Thomson Reuters, Bureau van Dijk)

• Local regulatory engagement

Scope

• Corporate KYC

• UAE initially, then Bahrain and open to others

Technical Components

• GDPR vendor solution

• Custom robotics for data collection within Corporate Treasury

• Citi KYC Policy integration

• Node integration with data service providers

Portal Customer C

Lightweight Customer B

Full Node Customer A

Governance and Portal (DSS)

Corda network inc. other KYC

& Trade Fin

Customer KYC Data

Customer KYC Docs

Attestations

Oracle / LEI match / Update

Interoperable profile

Update Profile Data / Permission / Revoke

Data Service Providers

Corp Supply Chain

Bank A

Attester A Receive / Attest / Clone

Request permission /

View

GDPR

Robotics

GDPR

Robotics

What is a Self-Sovereign KYC Utility?

11

A Self-Sovereign KYC Utility solution will guarantee the end-user owns the content and distribution of their data. A single version of validated and immutable data securely distributed real-time to all permissioned actors drastically reduces KYC processes. Corporate data held within your own firewalls until you permission the sharing of your data direct to a counterparty.

Why is blockchain the ultimate technology solution? We must always revert back to these objectives.

Blockchain Objectives

Why Blockchain in KYC?

1. Self Sovereign control of your data guaranteed

2. Immutability as a verification mechanism

3. Auditability and traceability back to source

4. Decentralization of data sourcing – security + fees

Behavior limitations on use case – are you the right firm to lead? Building a network between ‘untrusting and distributed’ participants is hard. You need a good answer for all of the below items to solve the challenge of moving from Prototype to Production.

12

# Common roadblocks on DLT adoption Your advantage in the proposed use case?

1 No consortium has coordinated the AM market. Most DLT projects initiated by sell-side. TBD

2 Commercial suspicion against the network owners trying to lead change – often FinTech startups or large banks TBD

3 Banks lack sufficient senior leadership drive to disrupt themselves – politics obstructs TBD

4 Bank-to-bank innovation struggles to deliver standardized workflows TBD

5 Risky and complex migration across many interconnected client systems TBD

6 Different paces of change and blockchain literacy at financial institutions TBD

7 IT Security, legal and others put up blockers that diminish the business case TBD

A B

Idea POC

D

Production

1 2 C

Prototype

3 4 5 6 7 % Completion / # Roadblocks