Daml Finance - What is the purpose of the Back2Back Service

Hi Daml-Finance Team

I have been experimenting with your daml-finance-app

can you explain what the purpose is of the BackToBack/Service ?

It is widely used in the Create New Issuance

The BackToBack service is a delegating contract between an issuer and a risk taking entity. In the Structured Notes scenario we demonstrate how an issuing entity can synchronously issue a structured product into its own as well as the risk book. The issuing entity sells the product to investors (eg. via a subscription / offering workflow), and upon settlement a hedging trade is booked against the risk taking entity. Using the BackToBack service we can execute all these trades atomically. The name stems from the fact that the issuing entity hedges itself “back-to-back” with the risk book, such that it doesn’t have any risk exposure left. It’s quite a common scenario in the structured products space, where typically a bank runs a central risk taking entity, while issuing entities are only responsible for distribution. The following picture shows the typical flow:


Hope this helps!

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Thanks for the insight. This was helpful