While bitcoin may have struggled to obtain universal admiration, there is a lot of love for the technology behind it: blockchain. As the financial services industry gets increasing excited about decentralized ledgers, these stock exchanges have taken a serious look at the way they can leverage the technology. Here’s how:
1. The Korea Exchange (South Korea). It was reported that the bourse operator was looking to launch a blockchain platform for the off-board trading market, linking sellers and buyers to trade securities. Currently, the outside dealing market is worth around KRW56 trillion ($45 billion). If the platform is a success it will be the first of it kind for non-listed securities. (The Korea Times)
2. Nasdaq (U.S.A.). Set up in 1971 as the world’s first electronic stock market, it is perhaps fitting the Nasdaq is at the vanguard of blockchain revolution. It broke new ground back in December 2015 when it announced it had made the first ever private securities issuance with blockchain technology (though this was contested). The shares were issued by Chain.com, a blockchain technology company, to a private investor using Nasdaq’s new Linq system. (Nasdaq, Financial Times)
3. London Stock Exchange (U.K.). In late 2015, the exchange was reported to be among a cross-industry group of institutions investigating how blockchain technology could be used to change the way securities trades are cleared, settled and reported in Europe. The group — named Post Trade Distributed Ledger Working Group — also includes UBS, CME Group, Societe Generale, LCH.Clearnet and Euroclear. The consortium, which is particularly interested in using blockchain for post-trade processes, now has nearly 40 members. (Financial News, CCN)
4. The Australia Securities Exchange (Australia). The ASX announced early in 2016 that it had teamed up with blockchain startup Digital Asset Holdings — launched by JP Morgan bankers Blythe Masters — to develop a new system for clearing and settling trades. ASX is part of a consortium of investors that pumped at total $52 million into the firm. The ASX aimed to develop a distributed ledger solution for investors, listed companies, and intermediaries. (ASX, Financial Times)
5. The Tallinn Stock Exchange (Estonia). The Tallinn Stock Exchange and The Estonia Central Securities Depository are both operated by New York-based Nasdaq. Nasdaq had revealed that it planned to use both platforms to develop several blockchain applications. The company has a contract with the government to use blockchain to improve processes like shareholder proxy voting, company registration and public pension registration. (Business Insider, Coindesk)
6. Tokyo Stock Exchange (Japan). Earlier last year, it was revealed that IBM had teamed up with Japan Exchange Group, which operates the Tokyo exchange, to start experimenting with blockchain technology for clearing and other operations. IBM said it hope the technology will reduce the cost, complexity and speed of trading and settlement processes. They had run two separate trials and concluded that digital ledger technology (pdf) “has the potential to transform capital market structure by encouraging new business development, improving operation efficiency, and contributing to cost reduction.” (Nikkei, IBM)
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